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Persistent bias in advice-giving


Chen, Zhuoqiong (Charlie); Gesche, Tobias (2017). Persistent bias in advice-giving. Working paper series / Department of Economics 228, University of Zurich.

Abstract

We show that a one-off incentive to bias advice has persistent effects. In an experiment, advisers were paid a bonus to recommend a lottery which only risk-seeking individuals should choose to a less informed client. Afterwards, they had to choose for themselves and make a second recommendation to another client, without any bonus. These advisers choose the risky lottery and recommend it a second time up to six times more often than advisers in a control group who were never offered a bonus. These results are consistent with a theory we present which is based on advisers' image concerns of appearing incorruptible.

Abstract

We show that a one-off incentive to bias advice has persistent effects. In an experiment, advisers were paid a bonus to recommend a lottery which only risk-seeking individuals should choose to a less informed client. Afterwards, they had to choose for themselves and make a second recommendation to another client, without any bonus. These advisers choose the risky lottery and recommend it a second time up to six times more often than advisers in a control group who were never offered a bonus. These results are consistent with a theory we present which is based on advisers' image concerns of appearing incorruptible.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C91, D03, D83, G11
Uncontrolled Keywords:Advice-giving, conflict of interest, self-signaling, self-deception
Language:English
Date:October 2017
Deposited On:01 Jun 2016 12:16
Last Modified:21 Nov 2017 18:30
Series Name:Working paper series / Department of Economics
Number of Pages:47
ISSN:1664-7041
Additional Information:Revised version
Official URL:http://www.econ.uzh.ch/static/wp/econwp228.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers-new.php

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