Persistent bias in advice-giving

Zhuoqiong (Charlie) Chen and Tobias Gesche

No 228, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: We show that a one-off incentive to bias advice has persistent effects. In an experiment, advisers were paid a bonus to recommend a lottery which only risk-seeking individuals should choose to a less informed client. Afterwards, they had to choose for themselves and make a second recommendation to another client, without any bonus. These advisers choose the risky lottery and recommend it a second time up to six times more often than advisers in a control group who were never offered a bonus. These results are consistent with a theory we present which is based on advisers' image concerns of appearing incorruptible.

Keywords: Advice-giving; conflict of interest; self-signaling; self-deception (search for similar items in EconPapers)
JEL-codes: C91 D03 D83 G11 (search for similar items in EconPapers)
Date: 2016-06, Revised 2017-10
New Economics Papers: this item is included in nep-cbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:228

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