Accounting and Finance Seminar: Utz Weitzel, VU Amsterdam

Title: Moral Nudges, The Banker’s Oath, And Financial Advice

2020.07.02 | Pernille Vorsø Jachobsen

Date Thu 03 Dec
Time 14:15 15:15
Location Online

Presenter: Utz Weitzel, VU Amsterdam

Title: Moral Nudges, The Banker’s Oath, And Financial Advice

Area of research:  Behavioral finance, experimental finance/economics, and corporate finance

Abstract: Financial misbehavior is widespread and costly. In response, the Dutch government legally requires every employee in the financial sector to take a Hippocratic oath, the so-called "banker's oath''. We investigate whether moral nudges that directly and indirectly remind financial advisers of their oath affect the quality of their service. In a large-scale audit study, professional auditors visited 201 Dutch financial advisers and confronted them with a conflict of interest. Without intervention nearly half of the advice is more in the bank's than in the customer's interest. When auditors apply a moral nudge that refers to the banker's oath, advisers are less likely to prioritize the bank's interests in favor of more neutral advice. Nudging advisers by referring to customer interests (without mentioning the oath) does not produce comparable effects. In additional prediction tasks, we elicit beliefs about the expected results of the audit study from a representative sample of 502 potential Dutch customers and from 122 Dutch experts in regulation and policy. Both groups, particularly the experts, expect much stronger, positive treatment effects of the oath than observed in the field.

Economics and Business Economics, Accounting and Finance Seminar Series