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Credit at Checkout: Present Bias and Klarna Behavior in Sweden

Jörnell, Carl LU (2025) NEKH02 20251
Department of Economics
Abstract
This thesis investigates what drives people to use credit-style Buy Now, Pay Later (BNPL) services, focusing on Klarna users in Sweden. Drawing on behavioral economics, it tests whether having a present-biased time preference (a strong preference for immediate rewards) can predict a person’s use of Klarna’s “Pay Later” and “Installments” features. To explore this, a cross-sectional survey (N =100) was conducted that combined hypothetical decision-making tasks with self-reported survey questions. This measured present bias, the general discount factor (δ), risk aversion, and loss aversion. Three regression models were estimated: Model 1 looked at overall Klarna usage frequency; Model 2 focused on whether Klarna users tend to use its... (More)
This thesis investigates what drives people to use credit-style Buy Now, Pay Later (BNPL) services, focusing on Klarna users in Sweden. Drawing on behavioral economics, it tests whether having a present-biased time preference (a strong preference for immediate rewards) can predict a person’s use of Klarna’s “Pay Later” and “Installments” features. To explore this, a cross-sectional survey (N =100) was conducted that combined hypothetical decision-making tasks with self-reported survey questions. This measured present bias, the general discount factor (δ), risk aversion, and loss aversion. Three regression models were estimated: Model 1 looked at overall Klarna usage frequency; Model 2 focused on whether Klarna users tend to use its credit-like options; and Model 3 examined choices in a real-stakes deferred payment scenario.
Across all models, present bias consistently emerged as the key predictor of BNPL behavior, whereas most other behavioral straits showed no statically significant effect. Self-reported measures of traits were only weakly correlated with actual behavior and did not predict outcomes once all factors were considered together. These results support the theory of quasi-hyperbolic discounting and highlight the value of using structured behavioral tasks, rather than questionnaires alone, to capture financial decision tendencies. The findings imply that BNPL platform designs should take into account psychological biases, such as present bias, that encourage consumers to delay payments. This may also warrant targeted consumer protection measures to help mitigate potential misuse of credit-style services. (Less)
Please use this url to cite or link to this publication:
author
Jörnell, Carl LU
supervisor
organization
course
NEKH02 20251
year
type
M2 - Bachelor Degree
subject
keywords
Present Bias Buy Now Pay Later (BNPL) Klarna Behavioral Economics Deferred Payment
language
English
id
9196859
date added to LUP
2025-09-12 09:17:16
date last changed
2025-09-12 09:17:16
@misc{9196859,
  abstract     = {{This thesis investigates what drives people to use credit-style Buy Now, Pay Later (BNPL) services, focusing on Klarna users in Sweden. Drawing on behavioral economics, it tests whether having a present-biased time preference (a strong preference for immediate rewards) can predict a person’s use of Klarna’s “Pay Later” and “Installments” features. To explore this, a cross-sectional survey (N =100) was conducted that combined hypothetical decision-making tasks with self-reported survey questions. This measured present bias, the general discount factor (δ), risk aversion, and loss aversion. Three regression models were estimated: Model 1 looked at overall Klarna usage frequency; Model 2 focused on whether Klarna users tend to use its credit-like options; and Model 3 examined choices in a real-stakes deferred payment scenario.
Across all models, present bias consistently emerged as the key predictor of BNPL behavior, whereas most other behavioral straits showed no statically significant effect. Self-reported measures of traits were only weakly correlated with actual behavior and did not predict outcomes once all factors were considered together. These results support the theory of quasi-hyperbolic discounting and highlight the value of using structured behavioral tasks, rather than questionnaires alone, to capture financial decision tendencies. The findings imply that BNPL platform designs should take into account psychological biases, such as present bias, that encourage consumers to delay payments. This may also warrant targeted consumer protection measures to help mitigate potential misuse of credit-style services.}},
  author       = {{Jörnell, Carl}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Credit at Checkout: Present Bias and Klarna Behavior in Sweden}},
  year         = {{2025}},
}