Persistent bias in advice-giving

Arbeitspapier

We show that a one-off incentive to bias advice has a persistent effect on advisers' own actions and their future recommendations. In an experiment, advisers obtained information about a set of three differently risky investment options to advise less informed clients. The riskiest option was designed such that it is only preferred by risk-seeking individuals. When advisers are offered a bonus for recommending this option, half of them recommend it. In contrast, in a control group without the bonus only four percent recommend it. After the bonus was removed, its effect remained: In a second recommendation for the same options but without a bonus, those advisers who had previously faced it are almost six times more likely to recommend the riskiest option compared to the control group. A similar increase is found when advisers make the same choice for themselves. To explain our results we provide a theory based on advisers trying to uphold a positive self-image of being incorruptible. Maintaining a positive self-image then forces them to be consistent in the advice they give, even if it is biased.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Working Paper ; No. 228

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Portfolio Choice; Investment Decisions
• Thema: advice-giving ; conflict of interest ; self-signaling ; self-deception

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Chen, Zhuoqiong ; Gesche, Tobias
• Ereignis: Veröffentlichung
• (wer): University of Zurich, Department of Economics
• (wo): Zurich
• (wann): 2016

Weitere Informationen

• DOI: doi:10.5167/uzh-124325
• Handle: http://hdl.handle.net/10419/162431
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ