Fair advice

Abstract

Millions of investors place their trust in financial advisors who may have incentives to give them bad advice. This may indicate that advisors behave more fairly than economic theory predicts. In this paper, we present results from a large-scale experiment studying advice-giving under conflicting interests. We use a binary dictator game as a baseline and transform it into a situation where the dictator gives advice that may or may not be followed. Our results show that people are averse to giving bad advice. When subjects are given the role of advisor, they behave less selfishly, even when the economic incentives and considerations remain the same as in the baseline dictator game.