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Peer Advice on Financial Decisions: A Case of the Blind Leading the Blind?

Author

Listed:
  • Sandro Ambuehl

    (University of Zurich)

  • B. Douglas Bernheim

    (Stanford University)

  • Fulya Ersoy

    (University of Chicago)

  • Donna Harris

    (University of Oxford)

Abstract

We investigate the impact of peer interaction on the quality of financial decision making in a laboratory experiment. Face-to-face communication with a randomly assigned peer significantly improves the quality of subsequent private decisions even though simple mimicry would have the opposite effect. We present evidence that the mechanism involves general conceptual learning (because the benefits of communication extend to previously unseen tasks), and that the most effective learning relationships are horizontal rather than vertical (because people with weak skills benefit most when their partners also have weak skills). The benefits of demonstrably effective financial education do not propagate to peers.

Suggested Citation

  • Sandro Ambuehl & B. Douglas Bernheim & Fulya Ersoy & Donna Harris, 2025. "Peer Advice on Financial Decisions: A Case of the Blind Leading the Blind?," The Review of Economics and Statistics, MIT Press, vol. 107(1), pages 240-255, January.
    • Handle: RePEc:tpr:restat:v:107:y:2025:i:1:p:240-255
    DOI: 10.1162/rest_a_01269
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