Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283380 
Year of Publication: 
2023
Series/Report no.: 
AWI Discussion Paper Series No. 734
Publisher: 
University of Heidelberg, Department of Economics, Heidelberg
Abstract: 
Robo-advisors are novel tools in financial markets that provide investors with low-cost financial advice, usually based on individual characteristics like risk attitudes. In a portfolio choice experiment running over 10 weeks, we study how much investors benefit from robo advice. We also study whether robos increase financial market participation. The treatments are whether investors just receive advice, have a robo making all decisions for them, or have to trade on their own. We find no effect on initial market participation. But robos help investors to avoid mistakes, make rebalancing more frequent, and overall yield portfolios much closer to the utility maximizing ones. Robo-advisors that implement the recommendations by default do significantly better than those that just give advice.
Subjects: 
algorithmic trading
experiment
financial markets
JEL: 
C91
D81
G12
G20
G41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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