Lenders overconfident in their ability to manage risk
With house prices rising steadily loan default rates fell, and lenders—overweighting recent events, looking at other people lending, and mindful of their immediate financial and competitive incentives—concluded that it was safe to continue lending.
Immediately related elementsHow this works
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The Global Financial Crisis »The Global Financial Crisis
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Long-term causes of the financial crisis? »Long-term causes of the financial crisis?
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Human cognitive biases »Human cognitive biases
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Lenders overconfident in their ability to manage risk
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Better to all fail together than to underperform separately »Better to all fail together than to underperform separately
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