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Delegation Decisions in Finance

Holzmeister, Felix ; Holmén, Martin ; Kirchler, Michael ; Stefan, Matthias and Wengström, Erik LU (2023) In Management Science 69(8). p.4828-4844
Abstract
Based on an online experiment with a sample of finance professionals and participants from the general population (acting as clients), we examine drivers and motives of clients’ choices to delegate investment decisions to agents. We find that clients favor delegation to investment algorithms, followed by delegation to finance professionals compensated with an aligned incentive scheme, and lastly to finance professionals receiving a fixed payment for investing on behalf of others. We show that trust in investment algorithms or finance professionals, and clients’ propensity to shift blame on others increase the likelihood of delegation, whereas clients’ own decision-making quality is associated with a decrease in delegation frequency.
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author
; ; ; and
organization
publishing date
type
Contribution to journal
publication status
published
subject
in
Management Science
volume
69
issue
8
pages
4828 - 4844
publisher
Informs
external identifiers
  • scopus:85168832673
ISSN
0025-1909
DOI
10.1287/mnsc.2022.4555
language
English
LU publication?
yes
id
8c80d9c2-d739-4497-999c-8fe9c352fd6d
date added to LUP
2022-03-25 15:47:45
date last changed
2023-10-26 14:58:59
@article{8c80d9c2-d739-4497-999c-8fe9c352fd6d,
  abstract     = {{Based on an online experiment with a sample of finance professionals and participants from the general population (acting as clients), we examine drivers and motives of clients’ choices to delegate investment decisions to agents. We find that clients favor delegation to investment algorithms, followed by delegation to finance professionals compensated with an aligned incentive scheme, and lastly to finance professionals receiving a fixed payment for investing on behalf of others. We show that trust in investment algorithms or finance professionals, and clients’ propensity to shift blame on others increase the likelihood of delegation, whereas clients’ own decision-making quality is associated with a decrease in delegation frequency.}},
  author       = {{Holzmeister, Felix and Holmén, Martin and Kirchler, Michael and Stefan, Matthias and Wengström, Erik}},
  issn         = {{0025-1909}},
  language     = {{eng}},
  number       = {{8}},
  pages        = {{4828--4844}},
  publisher    = {{Informs}},
  series       = {{Management Science}},
  title        = {{Delegation Decisions in Finance}},
  url          = {{http://dx.doi.org/10.1287/mnsc.2022.4555}},
  doi          = {{10.1287/mnsc.2022.4555}},
  volume       = {{69}},
  year         = {{2023}},
}