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Delegation Decisions in Finance

Felix Holzmeister (), Martin Holmen, Michael Kirchler (), Matthias Stefan () and Erik Wengström ()

Working Papers from Faculty of Economics and Statistics, University of Innsbruck

Abstract: Based on an online experiment with a sample of finance professionals and participants from the general population (acting as clients), we examine drivers and motives of clients' choices to delegate investment decisions to agents. We find that clients favor delegation to investment algorithms, followed by delegation to finance professionals compensated with an aligned incentive scheme, and lastly to finance professionals receiving a fixed payment for investing on behalf of others. We show that trust in investment algorithms or finance professionals, and clients' propensity to shift blame on others increase the likelihood of delegation, whereas clients' own decision-making quality is associated with a decrease in delegation frequency.

Keywords: Experimental finance; finance professionals; delegation decisions (search for similar items in EconPapers)
JEL-codes: C93 G11 G41 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2019
New Economics Papers: this item is included in nep-exp
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