The Asymmetry in Responsible Investing Preferences
50 Pages Posted: 21 May 2020 Last revised: 19 Aug 2021
Date Written: August 18, 2020
We design an experiment to understand how social preferences affect investment decisions through stock allocations and probability assessments. The major preference channel is asymmetric in social outcomes – although negative and positive responsible investment (RI) externalities have the same magnitudes, negative externalities have greater impact on investment choices. The effect is persistent, but heterogenous. We also find asymmetries in belief formation and learning constitute a secondary channel. Overall, our results are consistent with important stylized empirical facts and the predictions of recent RI theories that social preferences lead to different investment choices, but our analyses also suggest important future modeling directions.
Keywords: Social Preferences, Responsible Investment (RI), Social Responsible Investment (SRI)
JEL Classification: G11, G41, C91
Suggested Citation: Suggested Citation