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Asymmetric Dominance and Its Impact on Mortgage Default Deficiency Collection Efforts

When May 24, 2016
from 01:00 PM to 03:00 PM
Where Laundress Lane Seminar Room 1
Contact Name
Attendees Dr Michael Seiler
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The surge in mortgage default rates during the financial crisis has led to a corresponding dramatic increase in the type and number of firms who are entering the deficiency collection space. As such, we study the methods by which hedge funds and private equity collection firms can more profitably unwind this toxic debt. Specifically, we employ the theory of Asymmetric Dominance and find support that introducing a similar payment amount (i.e., a “decoy”) significantly induces borrowers to change their preference from one that is optimal for them to one that is sub-optimal. We then employ the Left-Most Digit effect in a new manner and demonstrate a statistically significant ability to mitigate the Asymmetric Dominance effect. Finally, we empirically find that Caucasians, males, and those of a greater net worth are more adept at avoiding violating the Independence of Irrelevant Alternatives axiom.



Dr. Michael J. Seiler is the K. Dane Brooksher Endowed Chair Professor of Real Estate and Finance at The College of William & Mary. The former Chief Economist at hedge fund – Palex Capital, Dr. Seiler is an internationally recognized behavioral real estate researcher whose studies have been cited in the Wall Street Journal, New York Times, LA Times, and Washington Post. He has published 150 research studies, has written several books, and serves as the editor of Real Estate Finance (REF) and the co-editor of Journal of Real Estate Literature (JREL). Dr. Seiler received the William N. Kinnard Young Scholar Award, a national recognition for making significant contributions in his field. More recently, his work on strategic mortgage default and foreclosure contagion was awarded the Governor's Technology Award in the area of Modeling & Simulation. Dr. Seiler is also the past President of the American Real Estate Society.


Michael will be available to answer questions and for discussions/to chat with PhD students following his presentation.