Journal of Northeastern University Natural Science ›› 2019, Vol. 40 ›› Issue (12): 1796-1799.DOI: 10.12068/j.issn.1005-3026.2019.12.023

• Management Science • Previous Articles     Next Articles

Research on Payment Preferences for Reverse Mortgage Based on q-Exponential Discount Function

LU Yang, WANG Jian, ZHUANG Xin-tian   

  1. School of Business Administration, Northeastern University, Shenyang 110169, China.
  • Received:2019-03-12 Revised:2019-03-12 Online:2019-12-15 Published:2019-12-12
  • Contact: LU Yang
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Abstract: In order to examine the payment preferences for reverse mortgage, the reverse mortgage models were established based on the exponential discount and q-exponential discount function, whose general solutions were obtained. Then, three reverse mortgages were designed with three different repayment plans (falling, constant, and rising). A satisfaction survey of the mortgage plans was conducted, and it was found that the values of the mortgages are the same using the exponential discount function but are different using the q-exponential discount function. The results showed that the rising profile is better evaluated than the other two options, and the falling profile is less evaluated than the other two. This indicates that financial institutions can improve their clients′ satisfaction of reverse mortgage without any interest rate hike by changing payment preferences.

Key words: q-exponential function, intertemporal decision making, reverse mortgage, econophysics, reverse mortgage

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