Interest Rate Changes and Borrower Search Behavior: An Experimental Replication with Extensions

Abstract This study replicates Lukas and Nöth’s (2019. Interest Rate Changes and Borrower Search Behavior.” Journal of Economic Behavior & Organization 163 (July): 172–89.) analysis of borrower behavior in response to interest rate changes, focusing on consumer decisions to seek alternative mortgage offers. Confirming the original findings, we observe that consumers are more likely to search for a new offer when rates rise, implying higher payment costs. Extending this framework, we introduce a savings account scenario, framing consumer decisions symmetrically. Results reveal that consumers similarly respond to interest rate decreases, actively seeking alternatives when potential interest earnings drop. This replication supports the robustness of the original findings and highlights symmetry in consumer search behavior across contexts.