The Influence of the Risk Reward Profile and of the Colour of Disclosure Documents on Attractiveness Perception of Mutual Fund Products

ABSTRACT This study investigates the influence of features of the mutual fund product and of the disclosure document on financial decision making. Using a laboratory setting, we show that the higher the risk and reward profile (RRP) of the product, the poorer the perception of the product. When the...

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Bibliographic Details
Published in:Journal of financial regulation 2022-04, Vol.8 (1), p.132-137
Main Authors: Bussoli, Candida, Ceravolo, Maria Gabriella, Fattobene, Lucrezia, Raggetti, GianMario
Format: Article
Language:English
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Summary:ABSTRACT This study investigates the influence of features of the mutual fund product and of the disclosure document on financial decision making. Using a laboratory setting, we show that the higher the risk and reward profile (RRP) of the product, the poorer the perception of the product. When the colour red (or blue) is applied to graphics (the RRP scale and the graph of the past performance) in the documents, the perception of the attractiveness of the product is lower (or higher) in comparison to a black and white document. Finally, longer visual processing as measured by means of eye-tracking is associated with a higher perception of attractiveness. This neurofinance study highlights the importance for regulators and supervisors of the financial industry to explore the influence of the different features of the product and of the disclosure document on consumers’ financial decision making.
ISSN:2053-4833
2053-4841
DOI:10.1093/jfr/fjab010