Experimental evidence on socially responsible investments – The role of preferences and information

Last registered on September 03, 2021

Pre-Trial

Trial Information

General Information

Title
Experimental evidence on socially responsible investments – The role of preferences and information
RCT ID
AEARCTR-0008178
Initial registration date
September 03, 2021
Last updated
September 03, 2021, 5:35 PM EDT

Locations

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Primary Investigator

Affiliation
Johannes Gutenberg University Mainz / Leibniz Institute for Financial Research SAFE

Other Primary Investigator(s)

PI Affiliation
Johannes Gutenberg University Mainz / Leibniz Institute for Financial Research SAFE
PI Affiliation
Johannes Gutenberg University Mainz / Leibniz Institute for Financial Research SAFE

Additional Trial Information

Status
In development
Start date
2021-09-05
End date
2022-12-31
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We study the role of preferences, incentives and information for socially responsible investments (SRI) in an online experiment. We analyze which investors buy sustainable stocks, to what extent they are willing to pay for information about the sustainability of stocks and how investors react to information about the performance of sustainable stocks. Finally, we analyze the effect of endogenous information acquisition in the ESG context in combination with different incentives to invest in a portfolio with a low ESG risk rating. To address these questions, we implement an incentive compatible stock market game with approximately 660 students. All participants are introduced to different information and incentive treatments. Furthermore, we experimentally elicit risk preferences, altruism, and warm glow giving and combine these measures with survey evidence.
External Link(s)

Registration Citation

Citation
Braun, Fabian, Andrej Gill and Florian Hett. 2021. "Experimental evidence on socially responsible investments – The role of preferences and information ." AEA RCT Registry. September 03. https://doi.org/10.1257/rct.8178-1.0
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
We implement an incentivized online stock market game and study individual investment decisions in different treatments. After collecting baseline demand for sustainable investments, we exogenously vary information on the performance of firms with a low ESG risk profile between different groups and observe subjects reaction to that new information in our incentivized stock market game. Furthermore, we vary incentives to invest in low ESG risk stocks and observe participants selective information acquisition and their subsequent investment behavior.
Intervention Start Date
2021-09-05
Intervention End Date
2021-10-31

Primary Outcomes

Primary Outcomes (end points)
Investments in sustainable stocks;
Wtp for ESG risk scores;
Choice of ESG information;
Share of investments in portfolio 1 (low ESG risk score);
Change of the share of investments in portfolio 1 (low ESG risk score);
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We implement an online experiment where individuals participate in an online stock market game. We first collect baseline information about the demand for ESG in the stock market game. In the next step, our intervention randomly assigns information about the performance of stocks with a low ESG risk score to the participants. 50% of the sample receives information of real studies which tell them that low ESG risk stocks outperform, while the remaining 50% receive information of real studies which tell that low ESG risk stocks underperform. We observe individuals reaction in the stock market game. In a later stage of the experiment, we randomly assign different incentives to invest in a portfolio with a low ESG risk to the participants. Part of the participants can endogenously acquire information about ESG and moral behavior while others cannot. We again observe participants behavior in the stock market game.
Experimental Design Details
Not available
Randomization Method
Computer-based randomization by otree
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
600 students + 60 students buffer (660 in total)
Sample size: planned number of observations
600 students + 60 students buffer (660 in total)
Sample size (or number of clusters) by treatment arms
information treatment:
300 sustainable stocks outperform conventional stocks treatment;
300 sustainable stocks outperform conventional stocks treatment;

combined information and incentive treatment (same individuals as before):
300 (150 high incentive and 150 low incentive) control group (no study);
300 (150 high incentive and 150 low incentive) study treatment (ESG and moral
behaviour);
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
For hypothesis 4 and 5, we only use half of the sample (n=300). Our sample size gives us 80% power of finding an effect size of 16% (Cohens´h 0.32) at an alpha of 5%. For the rest of the hypotheses, our sample size of 600 in total gives us 80% power of finding an effect size of 11% (Cohen´s h = 0.23) at an alpha of 5%.
Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name
Joint Ethics Committee of the Faculty of Economics and Business Administration of Goethe University Frankfurt and the Gutenberg School of Management & Economics of the Faculty of Law, Management and Economics of Johannes Gutenberg University Mainz
IRB Approval Date
2021-06-25
IRB Approval Number
N/A
Analysis Plan

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