Influencing Retail Investor Behavior Through Messages: An Experimental Study in Green Investing

Last registered on June 24, 2024

Pre-Trial

Trial Information

General Information

Title
Influencing Retail Investor Behavior Through Messages: An Experimental Study in Green Investing
RCT ID
AEARCTR-0013828
Initial registration date
June 17, 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
June 24, 2024, 2:08 PM EDT

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

Locations

Region

Primary Investigator

Affiliation
Universität Hamburg

Other Primary Investigator(s)

PI Affiliation
Universität Hamburg

Additional Trial Information

Status
In development
Start date
2024-06-22
End date
2024-08-31
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We study the impact of messages on subjects' green investment behavior.
External Link(s)

Registration Citation

Citation
Eiler, Tobias and Markus Nöth. 2024. "Influencing Retail Investor Behavior Through Messages: An Experimental Study in Green Investing." AEA RCT Registry. June 24. https://doi.org/10.1257/rct.13828-1.0
Experimental Details

Interventions

Intervention(s)
Before subjects allocate funds to various assets in an investment task, we expose those in the treatment groups to a message about green investing. A control group without treatment will serve as baseline for comparison.
Intervention Start Date
2024-06-22
Intervention End Date
2024-08-31

Primary Outcomes

Primary Outcomes (end points)
Willingness to pay, beliefs about green investing, level of effort, and asset allocation decisions
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We designed an experimental study to investigate our hypotheses, with subjects engaging in a non-competing single-player environment. Subjects will receive a message treatment about green investing. A control group without treatment will serve as baseline for comparison. Our key variables of interest include willingness to pay, beliefs about green investing, level of effort, and asset allocation decisions. Our research investigates how exposure to diverse messages about green investing influences decision-making processes, beliefs, and motivation to seek information about carbon offsets, providing insights into the impact of external messages on subjects' behaviors and beliefs toward green investments.
Experimental Design Details
The start survey includes questions about gender, dietary habits, and investment experience to gather initial background information. These variables are used as controls in the study. Subjects may choose “Prefer not to answer” for these questions.
The instructions will outline the real effort and investment task crucial to the experiment. Subjects are informed of these tasks and must answer three comprehension questions to confirm their understanding. If a subject is unable to answer all questions correctly on the third attempt, the experiment is terminated.
The message treatment consists of two levels (optimistic, skeptical) implemented in a between-subjects design, where subjects are randomly assigned to one of the treatment groups or to the control group to ensure comparability.
Treated subjects receive either an optimistic or skeptical text about green investing, which sets the tone for subsequent decision-making processes. These message treatments are designed to induce social norms that influence subjects' beliefs and behaviors toward green investing.
Following the message exposure, subjects will be asked to indicate their willingness to pay for a green asset such that they are indifferent between that asset and a conventional asset. This is followed by a series of five questions designed to assess subjects' beliefs about green investing on a Likert scale from 0 (strongly disagree) to 10 (strongly agree).
In the real effort task, subjects perform a numbers-to-letters decoding task to increase the probability of seeing information about carbon offsets in the investment task. Each correct answer adds 40% of the remaining distance to 100% to the probability, ensuring a steady growth that gradually decreases. The probability reaches 100% after eleven correct answers. Subjects can move on to the investment task at any time.
Subjects then complete an investment decision task in which they can allocate their endowment among four risky assets and one risk-free asset. They specify the allocation to the four risky assets, and the amount invested in the risk-free and interest-free asset is automatically calculated. One of the risky assets is a true green asset that generates more carbon offsets than the management fee (15% vs. 1.5%), while another green asset is considered greenwashed (0.75% vs. 1.5%). In addition, two conventional assets are available: one with independent returns, offering diversification potential, and another with returns that are drawn simultaneously with the returns of the green assets, making them identical.
Subjects progress through the decision-making process over five rounds, one of which is randomly selected for their bonus payment, emphasizing the incentivized nature of the experiment. Upon completion of all five rounds, subjects receive feedback on the results of the random processes and are provided with details of their bonus payment.
Following the experimental tasks, manipulation checks are conducted to assess subjects' perceptions of the treatments (optimistic, skeptical). In the exit survey, key measures, including a subset of the Environmental Portrait Value Questionnaire and an assessment of their financial literacy, are administered to capture intrinsic values and financial understanding, providing a more comprehensive insight into subjects' decision-making processes.
Randomization Method
Computer
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
150 subjects
Sample size: planned number of observations
150 subjects
Sample size (or number of clusters) by treatment arms
50 subjects per treatment/control group (approximately)
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Fakultät für Betriebswirtschaft, Universität Hamburg
IRB Approval Date
2024-06-12
IRB Approval Number
N/A

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials