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On the evolution of professional consulting

Author

Listed:
  • Thomas Gehrig

    (Albert-Ludwigs-Universität Freiburg)

  • Werner Güth

    (Max Planck Institute of Economics - Max-Planck-Gesellschaft)

  • René Levínský

    (Max Planck Institute of Economics - Max-Planck-Gesellschaft)

  • Vera Popova

    (Max Planck Institute of Economics - Max-Planck-Gesellschaft)

Abstract

In this experiment agents repeatedly invest in three state-specific assets. Theory requires portfolios to match the probabilities of the states. The treatments endow none, one, three, or all (of eight) investors with probability information. Will professional consulting evolve as an entrepreneurial activity? Will decisions follow theory or the 1/n-heuristic of equal investments in all assets? Will agents with probability information be asked and paid for advice? Portfolios designed with probability information reect the benchmark but do not converge to it over time. Learning to avoid the 1/n-heuristic is extremely fast. Although advice is sought and readily paid for, recommendations are not always followed.

Suggested Citation

  • Thomas Gehrig & Werner Güth & René Levínský & Vera Popova, 2010. "On the evolution of professional consulting," Post-Print hal-00856607, HAL.
    • Handle: RePEc:hal:journl:hal-00856607
    DOI: 10.1016/j.jebo.2010.02.016
    Note: View the original document on HAL open archive server: https://hal.science/hal-00856607
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    More about this item

    Keywords

    G11; C73; portfolio selection; expertise; advice; heuristics; experiments;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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