Promising young scholar, Chrystin Ondersma, published her excellent new article, titled “Are Debtors Rational Actors? An Experiment” in 13 Lewis & Clark L. Rev. 279 (2009). Here’s the abstract.
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This Article examines patterns in bankruptcy filing data to determine whether this data supports the simplistic Rational Actor model that is the basis for Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The Article closely reviews the Rational Actor and Situationist models–the current debate about human behavior in bankruptcy context. Analysis of empirical data of pre-BAPCPA, post- BAPCPA, and current filings demonstrate that while BAPCPA reduced the number of filings nationally, unexplained variation in filing patterns exist. These findings suggest that the Rational Actor model provides a limited understanding of human behavior in the bankruptcy arena. As salient economic factors–poverty, unemployment, and foreclosure rates–fail to adequately explain the local variation patterns, this Article explores non-economic factors to develop a better understanding of debtor decision making. Wide local variation patterns in filing data demonstrate that a more nuanced model that takes into account both nationwide and local situational pressures is required for understanding debtor decision-making and developing effective policies.
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You can download the article for free here. To read some related Situationist posts, see “The Financial Squeeze: Bad Choices or Bad Situations?” and “The Situation of College Debt – Part IV.”
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