Who Gets Duped? The Impact of Economics and Finance Education on Skepticism in an Investment Task

55 Pages Posted: 10 Jun 2020

See all articles by Calvin Blackwell

Calvin Blackwell

College of Charleston - School of Business

Norman Maynard

College of Charleston

James Malm

College of Charleston

Mark Pyles

College of Charleston

Marcia S. Snyder

affiliation not provided to SSRN

Mark David Witte

College of Charleston

Date Written: May 15, 2020

Abstract

Many financial scandals appear to depend on a lack of skepticism on the part of their victims. For example, sophisticated investors trusted Bernie Madoff, despite early warning signs of implausible returns. Our study investigates how education and personality explain skeptical behavior in financial decision making. In a simple survey, economics and finance students are asked to make an investment recommendation from among four different hypothetical funds, including one based on Madoff’s fund. We find that perceptions of the suspiciousness and ethicality of the Madoff fund affect a participant’s recommendation. In turn, these perceptions are affected by education and personality, with more education leading to higher suspicions.

Keywords: Skepticism, Education, Fraud

JEL Classification: D91, G41, I26

Suggested Citation

Blackwell, Calvin and Maynard, Norman and Malm, James and Pyles, Mark and Snyder, Marcia S. and Witte, Mark David David, Who Gets Duped? The Impact of Economics and Finance Education on Skepticism in an Investment Task (May 15, 2020). Available at SSRN: https://ssrn.com/abstract=3602180 or http://dx.doi.org/10.2139/ssrn.3602180

Calvin Blackwell (Contact Author)

College of Charleston - School of Business ( email )

Department of Economics
66 George Street
Charleston, SC 29424
United States
843-953-7836 (Phone)
843-953-5697 (Fax)

Norman Maynard

College of Charleston ( email )

66 George Street
Charleston, SC 29424
United States

James Malm

College of Charleston ( email )

Department of Finance
5 Liberty Street, Suite 416
Charleston, SC 29401
United States

Mark Pyles

College of Charleston ( email )

66 George Street
Charleston, SC 29424
United States

Marcia S. Snyder

affiliation not provided to SSRN

Mark David David Witte

College of Charleston ( email )

66 George Street
Charleston, SC 29424
United States

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