Fostering the adoption of robo-advisors: A 3-weeks online stock-trading experiment

Alexia Gaudeul and Caterina Giannetti

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: We consider how to increase the take-up of robo-advisors to help investors cope with the disposition effect. In a 3-weeks online stock-trading experiment, participants traded freely in week 1, were assisted by trading algorithms in week 2, and chose whether to be assisted in week 3. Passive algorithms prevented trading, active ones traded according to Bayesian rules. Participants could override algorithm choices in some treatments. Only a minority adopted robo-advisors in week 3, with the worst performers being the least likely to do so. Algorithm aversion was reduced if the algorithm traded actively and could be overridden.

Keywords: disposition effect; commitment devices; robo-advisors; sophisticated investors; trading; algorithm aversion (search for similar items in EconPapers)
JEL-codes: G11 G40 (search for similar items in EconPapers)
Date: 2021-07-01
New Economics Papers: this item is included in nep-cbe and nep-exp
Note: ISSN 2039-1854
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pie:dsedps:2021/275

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