Who gets duped? The impact of education on fraud detection in an investment task

Calvin Blackwell, Norman Maynard, James Malm, Mark Pyles, Marcia Snyder and Mark Witte
Additional contact information
Norman Maynard: Department of Economics, College of Charleston
James Malm: Department of Finance, College of Charleston
Mark Pyles: Department of Finance, College of Charleston
Marcia Snyder: Department of Finance, College of Charleston

Journal of Economics and Finance, 2024, vol. 48, issue 3, No 8, 734-753

Abstract: Abstract Many financial scandals appear to depend on a lack of skepticism on the part of their victims. Sophisticated investors trusted Bernie Madoff, for example, despite early warning signs of implausible returns. Our study investigates how education explains fraud detection in financial decision-making. In a simple survey, economics and finance students are asked to make an investment recommendation from among four hypothetical funds, including one based on Madoff’s fund. We use Truth Default Theory to explain our results. We show that education increases the likelihood that students are suspicious of Madoff’s fund, and that for students whose suspicions are aroused, education makes them less likely to choose the Madoff fund.

Keywords: Education; Fraud; Skepticism; Truth Default Theory (search for similar items in EconPapers)
JEL-codes: G41 I26 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s12197-024-09672-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jecfin:v:48:y:2024:i:3:d:10.1007_s12197-024-09672-z

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/12197/PS2

DOI: 10.1007/s12197-024-09672-z

Access Statistics for this article

Journal of Economics and Finance is currently edited by James Payne

More articles in Journal of Economics and Finance from Springer, Academy of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().