Knowing is Trusting? An Experimental Test of the Role of Information in Advisory
20 Pages Posted: 22 Jun 2015
Date Written: June 22, 2015
Abstract
The recent economic crisis still lingering in Europe has deeply affected the way individuals look at the investment market. Understanding the trust processes underlying the decision to invest with financial intermediaries is of particular importance both at managerial (product development and advertisement) and at normative level (how intermediaries are regulated). Using an online experiment, this paper investigates whether discrepancies in the financial literacy of investors and brokers can be used to explain the decision to trust – thus, to invest in the financial market. The results show that trust is affected by the information disclosure in somewhat unexpected ways.
Keywords: financial market, financial literacy, trust, advisory
JEL Classification: D12, D8, D91, G11
Suggested Citation: Suggested Citation