Paradoxical Effects of the Disclosure of Conflict of Interest on the Selection of a Pension Plan

32 Pages Posted: 7 Dec 2010 Last revised: 30 May 2011

See all articles by David Leiser

David Leiser

Dept. of Psychology - Ben Gurion University of the Negev

Nirit Gadsi

Hebrew University of Jerusalem

Noa Basher

Ben-Gurion University of the Negev

Avia Spivak

Ben-Gurion University of the Negev - Department of Economics

Date Written: December 6, 2010

Abstract

Rules requiring the disclosure of conflicts of interest are often established to reduce information asymmetries and so protect consumers from biased information. We report on an experimental study assessing the effect of disclosure by an insurance agent of his differential earnings for two savings plans -- a pension plan and an "executive insurance" savings plan. A "semantic differential" analysis brought out the dimensions along which the two products differ, and suggests why disclosure has no effect for most of the public, and has an excessive impact on the more financially literate segment of the population. In the situation studied, fair disclosure of conflict of interest, even of the boldest kind, do not always help the consumer.

Keywords: fair disclosure, conflict of interest, behavioral economics, saving , consumer protection, financial literacy

Suggested Citation

Leiser, David and Gadsi, Nirit and Basher, Noa and Spivak, Avia, Paradoxical Effects of the Disclosure of Conflict of Interest on the Selection of a Pension Plan (December 6, 2010). Available at SSRN: https://ssrn.com/abstract=1720858 or http://dx.doi.org/10.2139/ssrn.1720858

David Leiser (Contact Author)

Dept. of Psychology - Ben Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

HOME PAGE: http://www.bgu.ac.il/~dleiser

Nirit Gadsi

Hebrew University of Jerusalem ( email )

Mount Scopus
Jerusalem, IL Jerusalem 91905
Israel

Noa Basher

Ben-Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

Avia Spivak

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel

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