Self-interest-driven recommendations are prevalent in sales, financial and clinical advising, missionary activities, etc. For example, financial advisors recommend products for which they receive sales commissions. Spending time and effort convincing others about something that generates personal gain has shown to result in self-persuasion tendencies for those products. Gneezy et al (2020) show that advisors distort their beliefs to enable themselves to recommend the investment options that carry a commission. Schwardmann, Tripoli, and van der Weele (2019) implemented a field experiment to show that debaters are more likely to agree with their randomly assigned topic in international debate competitions.
We build on this relatively new literature to understand how the value of information affects self-persuasion. More specifically, we investigate how 1) paying for information or 2) exerting effort to obtain information affects the propensity to provide self-interest-driven recommendations to others and subsequent self-persuasion. We compare these two conditions to a control where information is free.
We adopt an experimental setup similar to Gneezy et al. (2020) in a lab experiment. Participants will be randomly assigned to the role of advisor or client. The advisor may receive information on two lottery projects: Project A and Project B, and will be asked to recommend one of the lottery projects to the client, who has no-information about the projects. The advisors receive a commission if they recommend and their clients choose project A. Then, advisors will also be asked to choose one of the projects for themselves.
There will be a total of 6 rounds. The lottery outcomes for projects A and B vary across rounds. In each round, either one project first/second order stochastically dominates the other, or there is a risk-return trade off. We adopt this method to examine the extent of advisor’s propensity to give a self-serving recommendation. For example, we are interested in understanding the advisor’s recommending behavior when the option that the advisor is asked to recommend to the client is dominant/dominated by the other option.
In addition to the control and two main conditions where we manipulate the cost/effort in information acquisition, we will implement three more conditions. The advisor in the control condition will have free information and earn a commission depending on their recommendation and the client's choice. To ensure the existence of self-persuasion, a control without any commission will also be examined (to replicate the results by Gneezy et al., (2020)). Treatment 1 will provide an opportunity to receive information on two projects by paying a cost, whereas the advisor needs to perform a real effort task to obtain the information of two projects in Treatment 2. Treatments 3 and 4 will have randomly selected rounds where the cost or the real effort task will be waived. We include the last two treatments, which are 3 and 4, to evaluate the intent to treat effect in the value of information acquisition. That is, these treatments allow us to compare those who pay/exert effort to get the information in each treatment to those who intend to pay/exert effort to get the information but get it for free.
The main outcome of interest is the option that the advisor chooses for themselves after they recommend to the client. We expect that subjects who pay or perform the real effort task to see the information of the lottery options would increase their self-persuasion by choosing the option that they recommended to the client. Moreover, this phenomenon would be more likely to happen when the lottery option is less constrained to recommend the option to the client. That is, the advisor will tend to choose the recommended option more often when the lottery is riskier than the other than when the lottery is obviously dominant to the other option. We will also utilize the eye-tracking device to further explain the advisor’s behavioral changes in recommendation and choice for themselves stages.
Gneezy, Uri, et al. "Bribing the self." Games and Economic Behavior 120 (2020): 311-324.
Schwardmann, Peter, Egon Tripodi, and Joël J. Van der Weele. "Self-persuasion: Evidence from field experiments at two international debating competitions." (2019).