Work

Can we make trading less hazardous to investors’ wealth? Evidence from a choice between flat rates or commissions for financial services*

Year: 2026

Type: article

Abstract: We exploit a real-world setting at a German brokerage where some investors are forced to choose between two pricing schemes for trading and holding mutual funds: a flat-rate versus commissions (pay-per-use, via front-end loads and annual fees). Advisors provide a tariff recommendation based on clients’ potential cost savings. Most clients follow this recommendation; still, 41% fail to choose the cost-beneficial scheme, and 83% of them exhibit a pay-per-use bias. Biased choices are partly related to the underestimation of trading costs and expectation-based loss aversion. Our results bear implications for designing pricing schemes in the financial industry.

Source: Journal of Economic Behavior & Organization

DOI: 10.1016/j.jebo.2026.107626

Authors: Steffen Meyer, Charline Uhr

Institution: Aarhus University

Language: English

Topic: Decision-Making and Behavioral Economics

Subfield: General Decision Sciences

Field: Decision Sciences

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,180

Funders: Aarhus Universitet, Danmarks Frie Forskningsfond, Universität Hamburg, Syddansk Universitet