Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148865
Authors: 
Angelova, Vera
Year of Publication: 
2016
Series/Report no.: 
SFB 649 Discussion Paper 2016-029
Abstract: 
An advisor is supposed to recommend a financial product in the best interest of her client. However, the best product for the client may not always be the product yielding the highest commission to the advisor. Do advisors nevertheless provide truthful advice? If not, will a voluntary or obligatory upfront payment by clients induce more truthful advice? According to the results, both types of payment lead to more truthful advice. More generally, in a senderreceiver game with conflict of interest, an upfront payment to the sender by the receiver improves information transmission.
Subjects: 
financial advisors
asymmetric information
sender-receiver game
reciprocity
experiments
JEL: 
C91
D82
D03
L15
M52
Document Type: 
Working Paper

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