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Nudging the financial market? A review of the nudge theory

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  • Cynthia Weiyi Cai

Abstract

A systematic review of the nudge literature and an examination of its applications across different domains reveals that: (i) a nudge, in the sense of using choice architecture to push people to choose desired results, works well; and (ii) a nudge, in the sense of pushing people to choose desired results so that people will be better off, remains questionable. In financial markets, regulators and financial intermediaries currently use nudge theory to: (i) adjust how investment choices are presented to investors; and (ii) provide information in a selective way. Besides nudging investors, it is also possible for regulators to nudge financial intermediaries towards making more ethical decisions.

Suggested Citation

  • Cynthia Weiyi Cai, 2020. "Nudging the financial market? A review of the nudge theory," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 3341-3365, December.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:4:p:3341-3365
    DOI: 10.1111/acfi.12471
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    2. Mario Cesare Nurchis & Marcello Di Pumpo & Alessio Perilli & Giuseppe Greco & Gianfranco Damiani, 2023. "Nudging Interventions on Alcohol and Tobacco Consumption in Adults: A Scoping Review of the Literature," IJERPH, MDPI, vol. 20(3), pages 1-10, January.
    3. Basu, Debarati & Sen, Kaustav, 2022. "Organizational form and access to capital: The role of regulatory interventions," Journal of Contemporary Accounting and Economics, Elsevier, vol. 18(3).
    4. Tafur Gómez, Jorge Andrés & Martínez Giraldo, Jhully Paulin, 2024. "Students' perception of the application of nudges," Revista Tendencias, Universidad de Narino, vol. 25(2), pages 190-218, July.
    5. Tiina Koskelainen & Panu Kalmi & Eusebio Scornavacca & Tero Vartiainen, 2023. "Financial literacy in the digital age—A research agenda," Journal of Consumer Affairs, Wiley Blackwell, vol. 57(1), pages 507-528, January.
    6. Tzikas, Alexandros & Koulierakis, George, 2023. "A systematic review of nudges on hand hygiene against the spread of COVID-19," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 105(C).
    7. Linda Dezső & Barna Bakó & Gábor Neszveda, 2022. "Exploiting context-dependent preferences to protect borrowers," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 27(4), pages 291-305, December.

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