Financial Disclosure, Risk Perception and Investment Choices: Evidence from a Consumer Testing Exercise

Gentile, Mattia; Linciano, Nadia; Lucarelli, Caterina; Soccorso, Paola

doi:10.2139/ssrn.2616277

Cited by 10 publications

(12 citation statements)

References 39 publications

(36 reference statements)

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“…() and Gentile et al . () amongst others. Note that graphical representations—such as the SRRI—could further facilitate the information processing by increasing the saliency of certain pieces of information (Lipkus, ; Pieters and Wedel, ).…”

Section: Literature Reviewmentioning

confidence: 91%

“…Gentile et al . () argue that the simplification and standardization of product information could help subjects to identify the optimal choice among similar investments. Corroborating experimental evidence regarding the impact of presentation formats on risk beliefs and investment decisions is provided in Weber et al .…”

Section: Literature Reviewmentioning

confidence: 99%

“…The introduction of the KIID should be viewed against the academic research demonstrating that presentation formats influence (risk) perception and investment choices. Gentile et al (2015) argue that the simplification and standardization of product information could help 6 An analysis of investment behaviour in the European retail investment market, concludes that features of the retail investment market might make consumer' investments decisions particularly prone to biases and errors. (Commission of the European Communities, 2008; Decision Technology Ltd, 2010; see also, European Commission, 2012).…”

Section: Literature Reviewmentioning

confidence: 99%

“…In addition, we examine the extent to which the SRRI risk disclosure requirements mitigate the effect of financial literacy on risk perception accuracy. We focus on risk perception, given that presentation formats affect risk perception and perceived risk tends to influence investment decisions (Weber et al, 2005;Hung et al, 2010;Glenzer et al, 2014;Gentile et al, 2015).…”

Section: Introductionmentioning

confidence: 99%

“…There is a more general consensus that, notwithstanding the fact that higher financial literacy levels could lead to better and more consistent investment decisions, even very literate people take financial decisions that are not free of behavioural biases (Glenzer et al ., ; Gentile et al ., ).…”

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confidence: 97%

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Improving Index Mutual Fund Risk Perception: Increase Financial Literacy or Communicate Better?

2017

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We investigate the effect of financial literacy and index mutual fund risk disclosure format on investors’ risk perception by examining the risk disclosure part in the Key Investor Information Document (KIID) for UCITS funds in Europe. Using an experimental survey administered to 244 university students we find that both financial literacy and the KIID risk representation affect investors’ risk level perception accuracy. In addition, we find indications that financial literacy is less important if the complexity of the risk decision framework is reduced, although in our samle this effect is weak. Our results indicate that as an alternative to efforts taken to stimulate financial literacy, policy makers can effectively impact investors’ risk assessment by presenting a risk indicator that simplifies the decision framework for all investors, irrespective of their level of financial literacy.

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Section: Literature Reviewmentioning

confidence: 91%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 97%

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