Can Simulated Experience Be Harnessed to Help People Make Investment Decisions?

To make profitable investment decisions, investors must know and understand their risks. They can learn about these risks in different ways. Evidence suggests that investors who learn from a “risk tool” simulator perceive financial risk more accurately, feel more informed and confident, and thus take on more financial risk. We attempt a conceptual replication of these findings, exploring whether they extend from kind to wicked environments and to investors with some investment experience. We conducted three studies online, amounting to 3,455 participants, and observe that neither the risk tool nor any of the other risk communication interventions lead to different risk taking or to different subjective representations of risk relative to a control condition in which participants received no intervention.