Algorithm aversion in delegated investing

Abstract The tendency of humans to shy away from using algorithms—even when algorithms observably outperform their human counterpart—has been referred as algorithm aversion. We conduct an experiment with young adults test for aversion in financial decision making. Participants acting investors can tie incentives either a fund manager or investment algorithm. find no sign aversion: participants care about returns, but do not have strong preferences which intermediary obtains these returns. Contrary what has suggested, are neither quicker lose confidence the after seeing it err. However, we that participants’ inability separate skill and luck evaluating intermediaries slows down migration