Delegation Decisions in Finance

50 Pages Posted: 30 Jan 2022

See all articles by Felix Holzmeister

Felix Holzmeister

University of Innsbruck - Department of Economics

Martin Holmen

University of Gothenburg - Department of Economics; University of Gothenburg - Centre for Finance

Michael Kirchler

University of Innsbruck

Matthias Stefan

University of Innsbruck

Erik Wengström

Department of Economics, Lund University; Hanken School of Economics - Helsinki Graduate School of Economics

Date Written: January 26, 2022

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.

Keywords: experimental finance, finance professionals, delegation decisions

JEL Classification: C93, G11, G41

Suggested Citation

Holzmeister, Felix and Holmen, Martin and Kirchler, Michael and Stefan, Matthias and Wengström, Erik, Delegation Decisions in Finance (January 26, 2022). Available at SSRN: https://ssrn.com/abstract=4018656 or http://dx.doi.org/10.2139/ssrn.4018656

Felix Holzmeister (Contact Author)

University of Innsbruck - Department of Economics ( email )

Universitaetsstrasse 15
Innsbruck, 6020
Austria

HOME PAGE: http://www.holzmeister.biz

Martin Holmen

University of Gothenburg - Department of Economics ( email )

School of Business, Economics and Law
Box 640
Gothenburg, 40530
Sweden
+46 31 786 6442 (Phone)
+46 31 7865114 (Fax)

University of Gothenburg - Centre for Finance ( email )

Box 640
Gothenburg, 403 50
Sweden

Michael Kirchler

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

Matthias Stefan

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, 6020
Austria

Erik Wengström

Department of Economics, Lund University ( email )

P.O. Box 7082
S-220 07 Lund
Sweden

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

Hanken School of Economics - Helsinki Graduate School of Economics ( email )

Helsinki
Finland

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