Do seemingly smarter consumers get better advice?


Bucher-Koenen, Tabea ; Koenen, Johannes



URL: http://mea.mpisoc.mpg.de/uploads/user_mea_discussi...
Additional URL: https://econpapers.repec.org/paper/meameawpa/20150...
Document Type: Working paper
Year of publication: 2015
The title of a journal, publication series: MEA Discussion Papers
Volume: 01-2015
Place of publication: München
Related URLs: https://ideas.repec.org/p/mea/meawpa/201501.html
Publication language: English
Institution: Business School > Finanzmärkte (Bucher-Koenen 2019-)
Subject: 300 Social sciences, sociology, anthropology
330 Economics
Abstract: In this paper, we study the interaction between financial advisors and customers with a potential conflict of interest. We show in a simple analytical framework that advisors have an incentive to provide better advice to consumers who appear to be better informed. From this, we derive an identification strategy to infer the quality of advice received from variables observed in a representative survey of German consumers. Our identification strategy makes use of the fact that we observe both a generally observable signal of a customer's financial literacy as well as an objective measure, which is not observed by the advisor. We apply this strategy to three different empirical settings. In each of these settings, we find consistent evidence that consumers with worse signals of financial literacy on average receive worse financial advice. In particular, both women and individuals without tertiary education are negatively affected.

Dieser Datensatz wurde nicht während einer Tätigkeit an der Universität Mannheim veröffentlicht, dies ist eine Externe Publikation.




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Bucher-Koenen, Tabea ; Koenen, Johannes (2015) Do seemingly smarter consumers get better advice? MEA Discussion Papers München 01-2015 [Working paper]


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