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Nudging the financial market? A review of the nudge theory

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  • Cynthia Weiyi Cai

Abstract

A systematic review of the nudge literature and an examination of its applications across different domains reveals that: (i) a nudge, in the sense of using choice architecture to push people to choose desired results, works well; and (ii) a nudge, in the sense of pushing people to choose desired results so that people will be better off, remains questionable. In financial markets, regulators and financial intermediaries currently use nudge theory to: (i) adjust how investment choices are presented to investors; and (ii) provide information in a selective way. Besides nudging investors, it is also possible for regulators to nudge financial intermediaries towards making more ethical decisions.

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  • Cynthia Weiyi Cai, 2020. "Nudging the financial market? A review of the nudge theory," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 3341-3365, December.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:4:p:3341-3365
    DOI: 10.1111/acfi.12471
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    2. Janice Hollindale & Pamela Kent & Xin Qu, 2022. "Proprietary costs and the choice of hard and soft greenhouse gas emissions’ disclosure," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(3), pages 3837-3873, September.
    3. Mario Cesare Nurchis & Marcello Di Pumpo & Alessio Perilli & Giuseppe Greco & Gianfranco Damiani, 2023. "Nudging Interventions on Alcohol and Tobacco Consumption in Adults: A Scoping Review of the Literature," IJERPH, MDPI, vol. 20(3), pages 1-10, January.
    4. Basu, Debarati & Sen, Kaustav, 2022. "Organizational form and access to capital: The role of regulatory interventions," Journal of Contemporary Accounting and Economics, Elsevier, vol. 18(3).
    5. Tafur Gómez, Jorge Andrés & Martínez Giraldo, Jhully Paulin, 2024. "Students' perception of the application of nudges," Revista Tendencias, Universidad de Narino, vol. 25(2), pages 190-218, July.
    6. Bonga-Bonga, Lumengo & Kirsten, Frederich, 2024. "Renewable energy generation and financial market dynamics in Europe: a disaggregated approach," MPRA Paper 122461, University Library of Munich, Germany.
    7. Tiina Koskelainen & Panu Kalmi & Eusebio Scornavacca & Tero Vartiainen, 2023. "Financial literacy in the digital age—A research agenda," Journal of Consumer Affairs, Wiley Blackwell, vol. 57(1), pages 507-528, January.
    8. Tzikas, Alexandros & Koulierakis, George, 2023. "A systematic review of nudges on hand hygiene against the spread of COVID-19," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 105(C).
    9. Linda Dezső & Barna Bakó & Gábor Neszveda, 2022. "Exploiting context-dependent preferences to protect borrowers," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 27(4), pages 291-305, December.

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