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On the benefits of robo-advice in financial markets

Robo-advisors are novel tools in financial markets that provide investors with low-cost financial advice, usually based on individual characteristics like risk attitudes. In a portfolio choice experiment running over 10 weeks, we study how much investors benefit from robo advice. We also study wheth...

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Bibliographic Details
Main Authors: Lambrecht, Marco (Author) , Oechssler, Joerg (Author) , Weidenholzer, Simon (Author)
Format: Book/Monograph Working Paper
Language:English
Published: Heidelberg Universitätsbibliothek Heidelberg 13 September 2023
Series:AWI discussion paper series no. 734 (September 2023)
In: AWI discussion paper series (no. 734 (September 2023))

DOI:10.11588/heidok.00033830
Subjects:
Graue Literatur
Online Access:Resolving-System, kostenfrei: https://nbn-resolving.de/urn:nbn:de:bsz:16-heidok-338303
Resolving-System, kostenfrei: http://dx.doi.org/10.11588/heidok.00033830
Verlag, kostenfrei, Volltext: http://www.ub.uni-heidelberg.de/archiv/33830
Verlag, kostenfrei: http://archiv.ub.uni-heidelberg.de/volltextserver/33830/1/Lambrecht_et_al_2023_dp734.pdf
Resolving-System, kostenfrei: https://nbn-resolving.org/urn:nbn:de:bsz:16-heidok-338303
Langzeitarchivierung Nationalbibliothek, kostenfrei: https://d-nb.info/130366920X/34
Resolving-System, kostenfrei: https://hdl.handle.net/10419/283380
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Author Notes:Marco Lambrecht, Jörg Oechssler, Simon Weidenholzer
Description
Summary:Robo-advisors are novel tools in financial markets that provide investors with low-cost financial advice, usually based on individual characteristics like risk attitudes. In a portfolio choice experiment running over 10 weeks, we study how much investors benefit from robo advice. We also study whether robos increase financial market participation. The treatments are whether investors just receive advice, have a robo making all decisions for them, or have to trade on their own. We find no effect on initial market participation. But robos help investors to avoid mistakes, make rebalancing more frequent, and overall yield portfolios much closer to the utility maximizing ones. Robo-advisors that implement the recommendations by default do significantly better than those that just give advice.
Physical Description:Online Resource
DOI:10.11588/heidok.00033830

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