AI Persuasion and Financial-Decision Making: Experimental Evidence on Dominated Investment Choices

Joshua Greubel, Henrik Guhling and Fabian Herweg

No 12925, CESifo Working Paper Series from CESifo

Abstract: In an online experiment, we study how generative AI steers individuals toward dominated choices and, conversely, helps them avoid such mistakes. Participants choose between two virtual index funds, one of which strictly dominates the other. An AI chatbot increases optimal choices by over 20 percentage points when promoting the optimal fund but reduces them by almost 30 points when promoting the dominated fund. Its influence is undiminished when framed as bank-provided despite a disclosed interest. Incentivized human advice steers choices toward the promoted fund but is significantly less effective. Transcript analyses tentatively suggest that AI's advantage reflects more persuasive argumentation.

Keywords: AI chatbots; conflicts of interest; dominated choices; financial advice; generative AI; persuasion; retail investors (search for similar items in EconPapers)
JEL-codes: C91 D14 G11 (search for similar items in EconPapers)
Date: 2026
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