Risk Disclosures and Investor Behavior

Last registered on March 15, 2024

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Pre-Trial

Trial Information

General Information

Title

Risk Disclosures and Investor Behavior

RCT ID

AEARCTR-0013150

Initial registration date

March 07, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

March 15, 2024, 4:14 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country

United Kingdom of Great Britain and Northern Ireland

Region

Primary Investigator

Name

John Gathergood

Affiliation

University of Nottingham

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Other Primary Investigator(s)

PI Name

Neil Stewart

PI Affiliation

Warwick Business School

PI Name

Edika Quispe-Torreblanca

PI Affiliation

University of Leeds

Contact Investigator

Additional Trial Information

Status

On going

Start date

2024-02-12

End date

2024-04-15

Keywords

Behavior, Finance & Microfinance

Additional Keywords

Investing, Equities, Stock Market

JEL code(s)

G1, G4, G5

Secondary IDs

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

This study uses a randomised control trial to evaluate the effects of contextualised risk warnings on investor behavior

External Link(s)

Registration Citation

Citation

Gathergood, John, Edika Quispe-Torreblanca and Neil Stewart. 2024. "Risk Disclosures and Investor Behavior." AEA RCT Registry. March 15. https://doi.org/10.1257/rct.13150-1.0

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Experimental Details

Interventions

Intervention(s)

In this randomised control trial we test the effects of experimental variation in the risk disclosures shown on screen on an online trading website. A control group is shown a standard risk warning emphasising that the value of investments can fall as well as rise. A first treatment group is shown a varied risk warning that adds a further disclosure stating that in the medium run the returns from investing in stocks and shares usually exceed those from cash savings. A second treatment group is shown the a varied risk warning that further adds cited empirical evidence on the higher returns from investing compared with cash savings.

This is a live trial involving individuals on the website of a stockbrokers. Previously we undertook survey-based trials to test the risk disclosures. Details of these are available at https://aspredicted.org/ZW3_6VT and https://aspredicted.org/MNV_CKX.

Intervention Start Date

2024-02-12

Intervention End Date

2024-03-18

Primary Outcomes

Primary Outcomes (end points)

There are two main outcomes. First, whether an individual in the trial opens an investing account with the stockbroker. Second, conditional upon opening an account, the level of investment in pounds sterling and the split of the investment between stocks/mutual funds and bonds. For existing customers, the study will examine changes in the investment portfolio, specifically focusing on the adjustment in amounts allocated to stocks/mutual funds and bonds following exposure to the modified risk warnings.

Primary Outcomes (explanation)

The outcome variables will take two forms. First, dummy variables (whether an account is opened, and whether the investor purchases stocks). Second, monetary values of investments, e.g. the total pound value. Third, shares of investment in an asset class, e.g. the percentage of the individual's total investment that is held on stocks / mutual funds / bonds.

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

The experimental design is a randomised control trial. Subjects will be individuals who navigate to the stockbroker's website and view one of the pages in the trial. For each page in the trial, the subject will be allocated at random to control, treatment one or treatment two. Using cookie data, the subject will remain in the treatment arm for the duration of the trial (unless they wipe their cookies, in which case they will be re-assigned at random to an arm the next time they navigate to the website).

Experimental Design Details

Randomization Method

Randomisation via Adobe Target

Randomization Unit

Individual

Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters

Sample size: planned number of observations

The trial will be live for 5 weeks and the number of observations will be determined by web traffic volume

Sample size (or number of clusters) by treatment arms

Three trial arms of equal size, with the actual number of observations being inherently dependent on the volume of web traffic during the trial's timeframe.

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Supporting Documents and Materials

IRB