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First Impressions Matter: An Experimental Investigation of Online Financial Advice

Author

Listed:
  • Julie R. Agnew

    (Raymond A. Mason School of Business, College of William and Mary, Williamsburg, Virginia 23185)

  • Hazel Bateman

    (UNSW Business School, UNSW Australia, Sydney NSW 2052, Australia)

  • Christine Eckert

    (Business School, University of Technology Sydney, Ultimo NSW 2007, Australia)

  • Fedor Iskhakov

    (Research School of Economics, The Australian National University, ACT 2601, Australia; ARC Centre of Excellence in Population Ageing Research, UNSW Australia, Sydney NSW 2052, Australia)

  • Jordan Louviere

    (School of Marketing, University of South Australia, Adelaide SA 5001, Australia)

  • Susan Thorp

    (University of Sydney Business School, University of Sydney, NSW 2006, Australia)

Abstract

We explore how individuals assess the quality of financial advice they receive and how they form judgments about advisers. Using an incentivized discrete choice experiment, we show that first impressions matter: consumers more often follow advisers who dispense good advice before bad. We demonstrate how clients’ opinions of adviser quality can be manipulated by using an easily replicated confirmation strategy that depends on the quality of the advice and the difficulty and order of the advice topics. Our results also reveal how clients benefit from their own past experience and how they use professional credentials to guide their choices.

Suggested Citation

  • Julie R. Agnew & Hazel Bateman & Christine Eckert & Fedor Iskhakov & Jordan Louviere & Susan Thorp, 2018. "First Impressions Matter: An Experimental Investigation of Online Financial Advice," Management Science, INFORMS, vol. 64(1), pages 288-307, January.
    • Handle: RePEc:inm:ormnsc:v:64:y:2018:i:1:p:288-307
    DOI: 10.1287/mnsc.2016.2590
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    References listed on IDEAS

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    2. Guglielmo Zappalà, 2022. "Drought exposure and accuracy: Motivated reasoning in climate change beliefs," Working Papers 2022.02, FAERE - French Association of Environmental and Resource Economists.
    3. Hugh Hoikwang Kim & Raimond Maurer & Olivia S. Mitchell, 2019. "How Cognitive Ability and Financial Literacy Shape the Demand for Financial Advice at Older Ages," NBER Working Papers 25750, National Bureau of Economic Research, Inc.
    4. Filippini, Massimo & Leippold, Markus & Wekhof, Tobias, 2024. "Sustainable finance literacy and the determinants of sustainable investing," Journal of Banking & Finance, Elsevier, vol. 163(C).
    5. Gerrard, Russell & Hiabu, Munir & Kyriakou, Ioannis & Nielsen, Jens Perch, 2019. "Communication and personal selection of pension saver’s financial risk," European Journal of Operational Research, Elsevier, vol. 274(3), pages 1102-1111.
    6. Lynn, Peter & Fumagalli, Laura & Muñoz-Bugarin, Jair, 2021. "Investigating the role of debt advice on borrowers’ well-being. An encouragement study on a new sample of over-indebted people in Britain," ISER Working Paper Series 2021-08, Institute for Social and Economic Research.
    7. Alonso-García, Jennifer & Bateman, Hazel & Bonekamp, Johan & van Soest, Arthur & Stevens, Ralph, 2022. "Saving preferences after retirement," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 409-433.
    8. Lenz, Guido & Mayer, Maximilian, 2023. "Hollywood, Wall Street, and Mistrusting Individual Investors," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 117-138.

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