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Abstract
This dissertation examines how individuals think about and manage their personal finances, with a particular focus on decisions regarding assets and debt. The work is organized as three distinct but conceptually related essays on consumer financial decision-making. The first essay, "Self-Other Differences in Perceptions of Wealth," explores how people evaluate wealth differently when considering their own financial situation versus that of others. Through a series of experiments, this work demonstrates that individuals focus disproportionately on debt when thinking about their own wealth compared to others' wealth. This differential focus affects both future financial planning and present consumption decisions. The findings extend the literature on self-other differences while offering new insights into how social comparisons shape financial behavior. The second essay, "Disclosing the costs of co-holding liquid assets and high-interest debt has limited impact on behavior," describes the nature of "co-holding"–simultaneously maintaining liquid assets and revolving credit card debt–using a novel, transaction-level dataset from a large retail bank in Australia. It then attempts to change co-holders' behavior through a large-scale randomized controlled trial. Specifically, the study is designed to test whether increasing awareness of co-holding behavior affects debt repayment. Despite the seemingly irrational nature of this behavior, the experiment reveals that simply making consumers aware of their co-holding status and its costs does not meaningfully change repayment behavior. These findings challenge conventional assumptions about the role of attention and awareness in financial decision-making. The findings also suggest that simple information disclosure, even when carefully designed and delivered through trusted channels, may not effectively address costly financial behaviors. The third essay, "Keeping Cash and Revolving Debt: How Consumers' Preference for Spending on Debit versus Credit Influences Their Decision to Co-Hold," develops a theoretical framework linking payment method preferences to co-holding behavior. Building on transaction-level data and survey evidence, this work demonstrates that consumers who prefer using debit cards for everyday expenses are more likely to engage in co-holding. The analysis reveals how mental accounting practices and payment preferences can lead to seemingly suboptimal financial outcomes. This essay advances our understanding of co-holding by identifying a novel psychological mechanism driving the behavior.