Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/274875 
Year of Publication: 
2022
Citation: 
[Journal:] Journal of Risk and Financial Management [ISSN:] 1911-8074 [Volume:] 15 [Issue:] 8 [Article No.:] 353 [Year:] 2022 [Pages:] 1-25
Publisher: 
MDPI, Basel
Abstract: 
Within the framework of a laboratory experiment, we examine to what extent algorithm aversion acts as an obstacle in the establishment of robo advisors. The subjects had to complete diversification tasks. They could either do this themselves or they could delegate them to a robo advisor. The robo advisor evaluated all the relevant data and always made the decision which led to the highest expected value for the subjects' payment. Although the high level of efficiency in the robo advisor was clear to see, the subjects only entrusted their decisions to the robo advisor in around 40% of cases. In this way, they reduced their success and their payment. Many subjects orientated themselves towards the 1/n-heuristic, which also contributed to their suboptimal decisions. As long as the subjects had to make decisions for others, they noticeably made a greater effort and were also more successful than when they made decisions for themselves. However, this did not have an effect on their acceptance of robo advisors. Even when they made decisions on behalf of others, the robo advisor was only consulted in around 40% of cases. This tendency towards algorithm aversion among subjects is an obstacle to the broader establishment of robo advisors.
Subjects: 
algorithm aversion
behavioural finance
decisions for others
diversification
experiments
portfolio choice
robo advisors
JEL: 
D81
D84
D91
G11
G21
G41
O31
O33
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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