References & Citations
Economics > General Economics
Title: Motives for Delegating Financial Decisions
(Submitted on 7 Sep 2023 (v1), revised 12 Dec 2023 (this version, v2), latest version 15 Apr 2024 (v3))
Abstract: Why do investors delegate financial decisions to supposed experts? We report a laboratory experiment designed to disentangle four possible motives. Almost 600 investors drawn from the Prolific subject pool choose whether or not to delegate a real-stakes choice among lotteries to a previous investor (an ``expert'') after seeing information on the performance of several available experts. We find that a surprisingly large fraction of investors delegate even trivial choice tasks, suggesting a major role for the blame shifting motive. A larger fraction of investors delegate our more complex tasks, suggesting that decision costs play a role for some investors. Some investors who delegate choose a low quality expert with high earnings, suggesting a role for chasing past performance. We find no evidence for a fourth possible motive, that delegation makes risk more acceptable.
Submission history
From: Mikhail Freer [view email][v1] Thu, 7 Sep 2023 00:46:02 GMT (835kb,D)
[v2] Tue, 12 Dec 2023 11:02:59 GMT (884kb,D)
[v3] Mon, 15 Apr 2024 17:21:30 GMT (586kb,D)
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