The Asymmetry in Responsible Investing Preferences

Jacquelyn Humphrey, Shimon Kogan, Jacob Sagi and Laura Starks

No 29288, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We design an experiment to understand how social preferences affect investment decisions through stock allocations and probability assessments. The major preference channel is asymmetric in social outcomes – although negative and positive responsible investment (RI) externalities have the same magnitudes, negative externalities have greater impact on investment choices. The effect is persistent, but heterogenous. We also find asymmetries in belief formation and learning constitute a secondary channel. Overall, our results are consistent with important stylized empirical facts and the predictions of recent RI theories that social preferences lead to different investment choices, but our analyses also suggest important future modeling directions.

JEL-codes: C91 G11 G41 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-cfn, nep-cwa and nep-exp
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