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Nudges in SRI: The Power of the Default Option

Author

Listed:
  • Jean-François Gajewski

    (Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon)

  • Marco Heimann

    (Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon)

  • Luc Meunier

    (ESSCA Research Lab - ESSCA - Ecole Supérieure des Sciences Commerciales d'Angers)

Abstract

We introduce nudges in order to incite investors to choose Socially Responsible Investment (SRI) funds instead of traditional funds. We have set up two online experiments with a total of 713 US retail investors, using three types of nudges to elicit their effects on investors' SRI investments level: making SRI the default investment, introducing a SRI explanation message, and priming ethical values by displaying shocking images. Making SRI the default option is the most efficient nudge to influence investors towards SRI. Its effect is twofold. First, around 50% of investors do not opt-out of the default allocation. Second, even investors who opt-out of the default allocation invest more in SRI than those in the control group, an effect that appears driven by anchoring. Although investors subjected to both priming and message content marginally increase their SRI investment, priming or message content in isolation appears to have a non-significant influence. For choice architects who want to steer retail investors towards SRI funds, making them the default option appears to be the most powerful nudge.

Suggested Citation

  • Jean-François Gajewski & Marco Heimann & Luc Meunier, 2022. "Nudges in SRI: The Power of the Default Option," Post-Print hal-03156921, HAL.
    • Handle: RePEc:hal:journl:hal-03156921
    DOI: 10.1007/s10551-020-04731-x
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