Inappropriate sales in the financial services industry: the limits of the rational calculus?
The paper explores the notion of 'misselling' in the context of financial services. 'Misselling' is treated as a special case of error in the classification of a discrete dependent variable. A simulation study is conducted using the sale of mortgage debt to outright owners of property as an example of how inappropriate sales manifest themselves. This is followed by the actual case of endowment mortgage sales. The results and discussion suggests that 'misselling' can be viewed (i) in the context of empirical regularities and a rationalizable view of the data and|or (ii) as a non rationalizable situation where the 'misselling' becomes 'pathological'. The paper highlights the need for a behavioural perspective, in addition to a more conventional economic treatment of the 'misselling' phenomenon. Copyright © 2000 John Wiley & Sons, Ltd.
Volume (Year): 21 (2000)
Issue (Month): 3-4 ()
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References listed on IDEAS
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- Borgers, Tilman, 1996.
"On the Relevance of Learning and Evolution to Economic Theory,"
Royal Economic Society, vol. 106(438), pages 1374-1385, September.
- Tilman Börgers, "undated". "On The Relevance of Learning and Evolution to Economic Theory," ELSE working papers 050, ESRC Centre on Economics Learning and Social Evolution.
- Foxall, Gordon R., 1999. "The marketing firm," Journal of Economic Psychology, Elsevier, vol. 20(2), pages 207-234, April. Full references (including those not matched with items on IDEAS)
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