Using mock advertisements in an experimental survey design, we examine how risk framing, the balance in disclosure of positive and negative product characteristics and reference to regulatory approved prospectuses, influences investors’ perception, and intended investment behavior. We show that explicit risk disclosure increases investors’ risk perception by about 5 percent, while balanced information disclosure decreases the inclination to search for additional information with 12 percent. We find the strongest effects when reference to regulatory approval is present as it increases investor’s willingness to invest with more than 10% and decreases the investors’ risk perception by almost 6%. Finally, between 3.5 and 4% of switching behavior in the willingness to invest is causally driven by the presence or absence of the regulatory of approval.
(Coauthor: P. de Goeij)

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