Individual Judgment and Trust Formation: An Experimental Investigation of Online Financial Advice

Publication Type:
Journal Article
UNSW Australian School of Business Research Paper, 2014, (2013), pp. 1 - 37
Issue Date:
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Using an online incentivized discrete choice experiment, we study how well individuals judge financial advice and whether factors other than advice quality influence their evaluations. We find evidence that some individuals rely on extraneous signals to judge advice quality and observe some persistency in adviser choice over time. Our results also explain how some advisers can maintain trustworthy reputations despite giving bad advice. Finally, we explore whether individuals learn throughout the experiment. Our findings have several public policy implications that are discussed in the conclusion.
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