NBER

Fulya Y. Ersoy

Loyola Marymount University
Department of Economics
1 LMU Drive
University Hall 4216
Los Angeles, CA 94043

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Loyola Marymount University

NBER Working Papers and Publications

September 2018Peer Advice on Financial Decisions: A case of the blind leading the blind?
with Sandro Ambuehl, B. Douglas Bernheim, Donna Harris: w25034
Previous research shows that many people seek financial advice from non-experts, and that peer interactions influence financial decisions. We investigate whether such influences are beneficial, harmful, or simply haphazard. In our laboratory experiment, face-to-face communication with a randomly assigned peer significantly improves the quality of private decisions, measured by subjects' ability to choose as if they properly understand their opportunity sets. Subjects do not merely mimic those who know better, but also make better private decisions in novel tasks. People with low financial competence experience greater improvements when their partners also exhibit low financial competence. Hence, peer-to-peer communication transmits financial decision-making skills most effectively when pee...

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