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Designing Disclosures

Testing the Efficacy of Disclosure in Retail Investment Advice

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Nudging - Possibilities, Limitations and Applications in European Law and Economics

Part of the book series: Economic Analysis of Law in European Legal Scholarship ((EALELS,volume 3))

Abstract

This chapter explores the psychology of disclosure, as a nudging instrument, in the context of advised financial investment decisions. It investigates how information about the financial advisor’s potential conflict of interest impacts on the participants’ judgement, whether as to attitudes or actions. Contrary to what is commonly suggested, problems of conflict of interest in the financial investment context may efficiently be treated by means of disclosures, provided that such disclosures explicit the consequences of the conflict for the decision maker. It remains to analyse how explanatory disclosures can be drafted so that their influence on the trust in the advice also translates into modified action.

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Notes

  1. 1.

    Thaler and Sunstein 2008; Calo 2014.

  2. 2.

    Thaler and Sunstein 2008; Sunstein 2013.

  3. 3.

    Ben-Shahar and Schneider 2010.

  4. 4.

    For a review of work about how people evaluate advice , see Bonaccio and Dala 2006; see also the seminal experimental data on advertising, Harris 1977.

  5. 5.

    Harvey and Fischer 1997 and Yaniv 2004.

  6. 6.

    Moore et al. 2010.

  7. 7.

    Issacharoff 2010.

  8. 8.

    Moore et al. 2010.

  9. 9.

    Loewenstein et al. 2012 and 2013.

  10. 10.

    Mussweiler and Strack 2000.

  11. 11.

    Tversky and Kahneman 1974; Strack and Mussweiler 1997; Cain et al. 2004.

  12. 12.

    Mussweiler 2003; Camerer 2003<CitationRef .

  13. 13.

    Ross and Nisbett 1991.

  14. 14.

    Sah et al. 2012 and 2013.

  15. 15.

    Ben-Shahar and Schneider 2010, 2014.

  16. 16.

    For a thorough presentation of the role, practices, and related issues, of intermediaries, see Judge 2015.

  17. 17.

    Hacketal et al. 2009.

  18. 18.

    Chater et al. 2010.

  19. 19.

    Judge 2015.

  20. 20.

    For a review, see Chater et al. 2010.

  21. 21.

    For experimental data, see Chater et al. 2010.

  22. 22.

    Issacharoff 2011.

  23. 23.

    Payne et al. 1993; Harvey and Bolger 2001; Schrah et al. 2006.

  24. 24.

    Yaniv 2004.

  25. 25.

    Bochner and Insko 1966; Scherif and Hovland 1961.

  26. 26.

    Harries et al. 2004.

  27. 27.

    Bonnacio and Dalal 2006.

  28. 28.

    For details about the collected data and statistical analyses, see Helleringer, Trust Me I Have a Conflict of Interest, forthcoming.

  29. 29.

    Sniezek and Van Swol 2001.

  30. 30.

    E.g., patient – doctor relationship: Sah et al. 2012, 2013.

  31. 31.

    Hewstone et al. 2012.

  32. 32.

    Chater et al. 2010.

  33. 33.

    Cain et al. 2005.

  34. 34.

    Marotta-Wurgler 2010; Mercer et al. 2010, Beshears et al. 2009.

  35. 35.

    Lacko and Pappalardo 2004.

  36. 36.

    see e.g. Hill 2009.

  37. 37.

    For this distinction, see Hill and O’Hara 2005.

  38. 38.

    Hardin 2001; Bacharach and Gambetta 2001.

  39. 39.

    Retail Investment Purchase Process European survey, in Chater et al. 2010.

  40. 40.

    Ben-Shahar and Schneider 2010; Sah et al. 2012 and 2013.

  41. 41.

    Calo 2012.

  42. 42.

    Inderst and Ottaviani 2012.

  43. 43.

    Sharot 2011.

  44. 44.

    Chater et al. 2010.

  45. 45.

    Ben-Shahar and Schneider 2010.

  46. 46.

    Moore et al. 2010.

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Authors and Affiliations

  1. Essec Business School, av Bernard Hirsch, CS 50105 Cergy, 95021, Cergy-Pontoise Cedex, France

    Geneviève Helleringer

  2. Institute of European and Comparative Law, Oxford University, St Cross Road, OX1 3UL, Oxford, UK

    Geneviève Helleringer

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  1. Faculty of Law, University of Lucerne, Lucerne, Switzerland

    Klaus Mathis

  2. Notre Dame Law School, University of Notre Dame, Notre Dame, Indiana, USA

    Avishalom Tor

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Helleringer, G. (2016). Designing Disclosures. In: Mathis, K., Tor, A. (eds) Nudging - Possibilities, Limitations and Applications in European Law and Economics. Economic Analysis of Law in European Legal Scholarship, vol 3. Springer, Cham. https://doi.org/10.1007/978-3-319-29562-6_9

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