Nudges in SRI: The Power of the Default Option

Jean-François Gajewski (), Marco Heimann () and Luc Meunier ()
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Jean-François Gajewski: MAGELLAN - Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon
Marco Heimann: MAGELLAN - Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon
Luc Meunier: ESSCA Research Lab - ESSCA - ESSCA – École supérieure des sciences commerciales d'Angers = ESSCA Business School

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Abstract: Abstract We introduce nudges in order to incite investors to choose Socially Responsible Investment (SRI) funds instead of traditional funds. We have set up two online experiments with a total of 713 US retail investors, using three types of nudges to elicit their effects on investors' SRI investments level: making SRI the default investment, introducing a SRI explanation message, and priming ethical values by displaying shocking images. Making SRI the default option is the most efficient nudge to influence investors towards SRI. Its effect is twofold. First, around 50% of investors do not opt-out of the default allocation. Second, even investors who opt-out of the default allocation invest more in SRI than those in the control group, an effect that appears driven by anchoring. Although investors subjected to both priming and message content marginally increase their SRI investment, priming or message content in isolation appears to have a non-significant influence. For choice architects who want to steer retail investors towards SRI funds, making them the default option appears to be the most powerful nudge.

Keywords: Investor behavior; Nudge theory; Sustainable and responsible investment (search for similar items in EconPapers)
Date: 2022-05-02
Note: View the original document on HAL open archive server: https://univ-lyon3.hal.science/hal-03156921v1
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Published in Journal of Business Ethics, 2022, 177 (3), pp.547-566. ⟨10.1007/s10551-020-04731-x⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03156921

DOI: 10.1007/s10551-020-04731-x

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