Social Transmission of Financial Decision Making Skills. A Case of the Blind Leading the Blind?

152 Pages Posted: 31 Dec 2016 Last revised: 1 Mar 2022

See all articles by Sandro Ambuehl

Sandro Ambuehl

University of Zurich - Department of Economics

B. Douglas Bernheim

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Fulya Ersoy

Loyola Marymount University

Donna Harris

University of Oxford - Department of Economics

Date Written: February 28, 2022

Abstract

We investigate the impact of peer interaction on the quality of financial decision making in a laboratory experiment. Face-to-face communication with a randomly assigned peer significantly improves the quality of subsequent private decisions even though simple mimicry would have the opposite effect. We present evidence that the mechanism involves general conceptual learning (because the benefits of communication extend to previously unseen tasks), and that the most effective learning relationships are horizontal rather than vertical (because people with weak skills benefit most when their partners also have weak skills). The benefits of demonstrably effective financial education do not propagate to peers.

Keywords: Experiment, Behavioral Welfare Economics, Peer Effects, Financial Literacy

JEL Classification: D03, D12, D69, G02

Suggested Citation

Ambuehl, Sandro and Bernheim, B. Douglas and Ersoy, Fulya and Harris, Donna, Social Transmission of Financial Decision Making Skills. A Case of the Blind Leading the Blind? (February 28, 2022). Rotman School of Management Working Paper No. 2891753, Available at SSRN: https://ssrn.com/abstract=2891753 or http://dx.doi.org/10.2139/ssrn.2891753

Sandro Ambuehl (Contact Author)

University of Zurich - Department of Economics ( email )

Zürich
Switzerland

HOME PAGE: http://https://sites.google.com/site/sandroambuehl/home

B. Douglas Bernheim

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
650-725-8732 (Phone)
650-725-5702 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Fulya Ersoy

Loyola Marymount University ( email )

1 LMU Drive
Los Angeles, CA 90045
United States
+1 310 338 7372 (Phone)

HOME PAGE: http://https://sites.google.com/site/drfulyaersoy

Donna Harris

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, Oxfordshire OX1 3UQ
United Kingdom

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