Nudging the financial market? A review of the nudge theory

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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.
Original languageEnglish
Pages (from-to)1-25
Number of pages25
JournalAccounting and Finance
DOIs
Publication statusE-pub ahead of print - 28 Mar 2019

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