The Choice Architecture of Sustainable and Responsible Investment: Nudging Investors Toward Ethical Decision-Making
This paper applies insights from behavioral economics and nudge theory to foster sustainable and responsible investment (SRI). SRI provides an opportunity to express and promote ethical values via choice of financial instruments. While policy-makers have tried to encourage greater participation in S...
| Main Author: | |
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| Format: | Electronic Article |
| Language: | English |
| Check availability: | HBZ Gateway |
| Journals Online & Print: | |
| Interlibrary Loan: | Interlibrary Loan for the Fachinformationsdienste (Specialized Information Services in Germany) |
| Published: |
2017
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| In: |
Journal of business ethics
Year: 2017, Volume: 140, Issue: 4, Pages: 743-753 |
| Further subjects: | B
Economic policy-making
B Ethics B Sustainable and responsible investment B Corporate social responsibility B Sustainable Development B nudge theory B investor behavior B Choice architecture |
| Online Access: |
Volltext (JSTOR) Volltext (lizenzpflichtig) |
| Summary: | This paper applies insights from behavioral economics and nudge theory to foster sustainable and responsible investment (SRI). SRI provides an opportunity to express and promote ethical values via choice of financial instruments. While policy-makers have tried to encourage greater participation in SRI, the majority of retail investors retain a conventional approach to investment. I develop a conceptual framework to improve the effectiveness of SRI policy-making. The first part of the framework comprises a transmission mechanism which emphasizes the role of SRI as a driver for sustainable development. The second part is a model of the individual decision for or against SRI. The framework suggests that low SRI demand is a case of behavioral market failure, and that nudging is a suitable tool for dismantling behavioral barriers to SRI. A specific example of smart choice architecture is used to illustrate the framework’s potential in the design of an SRI nudge. Assuming the nudge stands up to the rigors of empirical testing, it may well provide a feasible alternative for policy-makers. |
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| ISSN: | 1573-0697 |
| Contains: | Enthalten in: Journal of business ethics
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| Persistent identifiers: | DOI: 10.1007/s10551-015-2877-9 |