Testing four nudges in socially responsible investments: Default winner by inertia

Luc Meunier (luc.meunier@essca.fr) and Sophie Richit (sophie.richit@iae-aix.com)
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Luc Meunier: ESSCA Research Lab - ESSCA - ESSCA – École supérieure des sciences commerciales d'Angers = ESSCA Business School
Sophie Richit: CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon

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Abstract: Socially responsible investments (SRI) suffer from a lack of investments from individual investors, despite their positive attitudes toward SRI. This attitude–behavior gap is a serious issue, as SRI is often perceived as a way to promote sustainable development. We investigate nudges, especially the default option, as a way to encourage SRI. In a pre‐registered study conducted in October 2021 with 1050 US investors, we pit four nudges against one another to encourage individual investors to invest in SRI. All nudges significantly increased investment in SRI compared with the control group. Making SRI the default option with frictions to opt‐out is the most efficient intervention. This is closely followed by a default option without friction to opt out and option partitioning, which are not significantly different from each other. Precommitment, although statistically significant, has a modest effect on investment in SRI and is inferior to the other nudges. Overall, the two types of default as well as option partitioning are significant and impactful solutions for increasing investment in SRI.

Keywords: ESG; individual investors' behavior; nudges; socially responsible investments; sustainable development (search for similar items in EconPapers)
Date: 2023-09-26
Note: View the original document on HAL open archive server: https://amu.hal.science/hal-04325247v1
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Published in Business ethics, the environment & responsibility, 2023, ⟨10.1111/beer.12612⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04325247

DOI: 10.1111/beer.12612

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