Guessing the Odds: Subjective Probabilities and Investment Decisions Under PRIIPs

Last registered on April 24, 2026
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Pre-Trial

Trial Information

General Information

Title
Guessing the Odds: Subjective Probabilities and Investment Decisions Under PRIIPs
RCT ID
AEARCTR-0018402
Initial registration date
April 17, 2026

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
April 24, 2026, 8:42 AM EDT

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

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Primary Investigator

Name
Sofia Ramos
Affiliation
ESSEC Busines school
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Other Primary Investigator(s)

PI Name
Lidia Loban
PI Affiliation
Deusto Business School
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PI Name
Maurice McCourt
PI Affiliation
University of Melbourne
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PI Name
Angela Sutan
PI Affiliation
ESSEC Business School
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PI Name
Vijay Yadav
PI Affiliation
ESSEC Business School
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Additional Trial Information

Status
In development
Start date
2026-04-20
End date
2027-01-31
Keywords
Finance & Microfinance
Additional Keywords
Financial disclosure, Belief formation, Investment decisions
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This study examines how financial disclosure formats affect belief formation and investment decisions. Participants complete a two-round incentivized investment task in which they observe information about a risky fund and allocate €10,000 between a risky and a safe asset. The treatment varies the format of return information: (i) a scenario-based disclosure consistent with EU Packaged Retail and Insurance-based Investment Product (PRIIP) regulation, presenting labeled outcomes without probabilities; (ii) a past-performance disclosure based on historical returns; and (iii) a combined display including both formats (IS3).

The experimental design combines between-subject variation in the first round with within-subject variation across rounds through randomized disclosure sequences. The empirical analysis focuses on three linked objects: beliefs, their internal structure, and investment choices. In particular, the study tests whether disclosure format affects expected returns, the distribution of subjective probabilities, and the mapping from beliefs to portfolio allocation. The design further allows for an examination of whether treatment effects operate through changes in beliefs and whether they are consistent with salience and ambiguity-based mechanisms.
External Link(s)

Registration Citation

Citation
Loban , Lidia et al. 2026. "Guessing the Odds: Subjective Probabilities and Investment Decisions Under PRIIPs ." AEA RCT Registry. April 24. https://doi.org/10.1257/rct.18402-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Participants complete a two-round incentivized investment task. In each round, they observe a disclosure describing the performance of a risky investment fund, report their beliefs about future returns, and allocate a €10,000 endowment between a risky fund and a safe asset paying a fixed return of 2%.
The treatment varies the format in which return information is disclosed. Three information settings (IS) are used: (IS1) a PRIIPs-style scenario table presenting four labeled outcomes — stress, unfavourable, moderate, and favourable — without associated probabilities; (IS2) a table of historical realized returns; and (IS3) both formats presented simultaneously.
Participants are randomly assigned to one of five disclosure sequences across the two rounds: Scenario performance →Past performance (IS1 then IS2), Past performance → Scenario performance (IS2 then IS1), Scenario performance → Scenario performance (IS1 repeated), Past performance → Past performance (IS2 repeated), and Combined →Combined (IS3 repeated). Crossover sequences enable within-subject identification of format effects; retest sequences serve as the comparison group to isolate format switching from generic second-round trends.
Intervention Start Date
2026-04-20
Intervention End Date
2026-11-30

Primary Outcomes

Primary Outcomes (end points)
Expected returns, measured as: (1) a stated point estimate of the fund's most likely one-year return, expressed as a percentage; (2) an implied expected return constructed as the probability-weighted mean across eight predefined return bins each spanning a 5-percentage-point range.
Primary Outcomes (explanation)
The point estimate is elicited as a direct numerical response. The implied expected return is derived from the participant's full subjective probability distribution, elicited by asking participants to allocate 100 percentage points across the eight return bins. The implied expected return is the probability-weighted average of the bin midpoints.

Secondary Outcomes

Secondary Outcomes (end points)
Risky allocation (share of €10,000 invested in the risky fund); integration gap (difference between point estimate and implied expected return); belief concentration (Herfindahl index over probability bins); tail risk perception (probability assigned to the bottom two return bins); belief updating (within-participant change in expected returns across rounds); allocation change (within-participant change in risky allocation across rounds).
Secondary Outcomes (explanation)
The integration gap captures internal inconsistency between summary beliefs and the underlying distribution. The Herfindahl index is computed as the sum of squared probability shares across the eight bins, with higher values indicating more concentrated beliefs. Tail risk perception is the sum of probabilities assigned to the two lowest return bins, pre-specified as the measure of sensitivity to extreme negative outcomes. Belief updating and allocation change are first differences across rounds and are used in the within-subject specifications.

Experimental Design

Experimental Design
Randomized controlled experiment with a two-round crossover design. Participants are recruited from the laboratory subject pool at a Business School in France, consisting predominantly of students. Assignment to disclosure sequences is fully randomized at the individual level using the Qualtrics randomizer, independent of participant characteristics. The design supports identification through both between-subject comparisons in Round 1 and within-subject changes across rounds. The experiment may be conducted in multiple waves of data collection. The primary analyses are pre-specified as described, while additional analyses, particularly those exploring heterogeneity, belief structures, and behavioral mechanisms, are considered exploratory.
Experimental Design Details
Not available
Randomization Method
Individual-level randomization using the Qualtrics randomizer tool. Assignment to one of five disclosure sequences (Scenario performance →Past performance, Past performance → Scenario performance, Scenario performance → Scenario performance, Past performance → Past performance, Combined→Combined) is fully automated given pre specified percentages and independent of participant characteristics.
Randomization Unit
Individual participant.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
300 participants (same as observations; design is not clustered).
Sample size: planned number of observations
300 participants 600 participant-round observations (300 participants × 2 rounds).
Sample size (or number of clusters) by treatment arms
Participants are allocated across five sequence arms (Scenario performance →Past performance, Past performance → Scenario performance, Scenario performance → Scenario performance, Past performance → Past performance, Combined→Combined) according to pre-specified proportions, with approximately 35% assigned to S→P, 35% to P→S, 10% to S→S, 10% to P→P, and 10% to C→C, subject to random variation at assignment. This corresponds to roughly 210 participants per main crossover arm and smaller subsamples in the retest conditions.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Participants are allocated across five sequence arms (Scenario performance →Past performance, Past performance → Scenario performance, Scenario performance → Scenario performance, Past performance → Past performance, Combined→Combined) according to pre-specified proportions, with approximately 35% assigned to S→P, 35% to P→S, 10% to S→S, 10% to P→P, and 10% to C→C, subject to random variation at assignment. This corresponds to roughly 210 participants per main crossover arm and smaller subsamples in the retest conditions.
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Ethics Comitee of ESSEC Business School
IRB Approval Date
2025-12-16
IRB Approval Number
2025-073
Analysis Plan