Adam Smith Business School

Dr Peiran Jiao, University of Maastrich

"Norms make investors socially responsible."
Wednesday, 18 October. 3 pm
Room 282 Adam Smith Business School Building

Abstract

The amount of assets under management that involve socially responsible investments (SRI) has been increasing tremendously, and yet we still lack a good understanding of why investors invest responsibly. The literature so far has favoured explanations based on altruistic social preferences, and social signalling. However, in this project, we propose a completely new alternative mechanism, namely, norm following, which is also likely an important driver of SRI. Our society is full of social norms, such as traffic and cultural norms. Norms define what the most socially appropriate action in a given situation is. When people judge the behaviour of others and themselves, they compare it with what they believe is the normative standard and disapprove or feel bad when the taken action is against the norm. In a series of lab experiments, we find that belief about a prosocial norm can lead to SRI even if investors do not care about the real social impact generated by the investment. Moreover, we also find evidence regarding how norm perceptions change how participants incorporate new information when updating beliefs about SRI. These findings are crucial for modelling SRI behaviour and for designing policy interventions to promote SRI.

Bio

Dr. Peiran Jiao is an Associate Professor of Finance at the Department of Finance, School of Business and Economics, Maastricht University (UM). He is also an Associated Fellow at Nuffield College, University of Oxford, Associated Member of the Nuffield Centre for Experimental Social Sciences (CESS) and the Director of the Maastricht University Behavioral Insights Centre (UM-BIC). Before joining UM, Dr. Jiao was a Postdoctoral Research Fellow in the Department of Economics and Nuffield College, University of Oxford from 2014 to 2017. He obtained his PhD degree in Economics from Claremont Graduate University (CA, USA) in 2014. His research mainly focuses on behavioral and experimental finance/economics. His research papers traverse a number of disciplines, such as economics, finance, psychology and neuroscience, with a mixture of theoretical, empirical and experimental approaches. He currently focuses on three topics: (1) experience and memory-based learning; (2) information processing from the news and social media; (3) biases in belief formation and updating. His papers have been published in peer-reviewed journals such as the Management Science, the Review of Economics and Statistics, the Economic Journal, Journal of Economic Behavior and Organization, Brain Research, Nature Scientific Reports, Cortex, etc. His projects have been funded by the NWO (Dutch Science Council) Vidi grant, the Marie Curie Individual Fellowship, the John Fell Fund, Harvard University Foundations of Human Behavior Grant, INQUIRE Europe research grant, etc.

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First published: 6 October 2023