Can Information Shape Macroeconomic Disaster Risk Perception and Stimulate Investment? An Experiment with Experts and Laypersons

Brice Corgnet (), Camille Cornand () and Pauline Gandré
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Brice Corgnet: Emlyon Business School, Université Lumière Lyon 2, Université Jean Monnet Saint-Etienne, GATE, CNRS, 69007, Lyon, France
Camille Cornand: GATE CNRS, Université Lumière Lyon 2, Université Jean-Monnet Saint-Etienne, Emlyon Business School, 69007, Lyon, France

No 2515, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: Macroeconomic disasters are low-probability events with severe economic and financial consequences. Using a survey experiment with both finance experts and laypersons, we conduct the first incentivized elicitation of beliefs about macroeconomic disaster risk and subsequent investment in risky financial assets. Our findings indicate that, consistent with the systematic overweighting of recent disasters, both laypersons and finance experts overestimate disaster risk, leading to underinvestment in our portfolio task. However, we find that communicating historical information about the frequency of macroeconomic disasters helps to correct misperceptions of this frequency and stimulate investment. Although participants adjust their beliefs in the expected direction, they fail to react to the precision of information while, in the case of laypersons, reacting to the salience of information. Our findings offer practical guidelines for effective communication by financial institutions and show that they depend on the financial expertise of the target population.

Keywords: Macroeconomic disasters; Expectations; Communication; Randomized information experiment (search for similar items in EconPapers)
JEL-codes: C11 C9 D83 D91 E71 G11 (search for similar items in EconPapers)
Date: 2025
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