Department of Economics
University of Oxford
Manor Road Building, Manor Road
Institutional Affiliation: Oxford University
NBER Working Papers and Publications
|September 2018||Peer Advice on Financial Decisions: A case of the blind leading the blind?|
with Sandro Ambuehl, B. Douglas Bernheim, Fulya Ersoy: w25034
Previous research shows that many people seek financial advice from non-experts, and that peer interactions influence financial decisions. We investigate whether such influences are beneficial, harmful, or simply haphazard. In our laboratory experiment, face-to-face communication with a randomly assigned peer significantly improves the quality of private decisions, measured by subjects' ability to choose as if they properly understand their opportunity sets. Subjects do not merely mimic those who know better, but also make better private decisions in novel tasks. People with low financial competence experience greater improvements when their partners also exhibit low financial competence. Hence, peer-to-peer communication transmits financial decision-making skills most effectively when pee...