FOSTERING TRUST IN

THE ADVICE OF
EXPERTS
Alexia Gaudeul
CollEcons PhD colloquium
Georg-August-Universität, Göttingen
Thursday, April 25, 2019
Outline
1. Focus of this presentation and definition of terms
2. The context: A technocratic society.
3. The diagnosis: Lack of trust in experts
4. The causes: Why do people not trust in experts?
5. The solutions: What can be done to promote trust in experts?
6. Own work: Nudges, robo-advisers and feedback systems.
7. Summary and Conclusion
Focus of this presentation
• There is no “view from nowhere” (Nagel, 1989, Sugden, 2018)
• I am a behavioral economist, with good knowledge of decision-making research
and the literature on judge-adviser systems.
• I will deal mainly with advice in economic decision making
• I will speak mainly about behavioral issues in the relation expert-advisee.
Definition of terms
• Expert: Someone with extensive knowledge, experience and skill in
solving problems in a specific domain.
• Trust: Belief in knowledge, honesty, fairness and benevolence of
someone or of an institution.
• In our context, trust will be shown by seeking information from, listening and
following the advice of someone.
 CONTEXT: A
TECHNOCRATIC
SOCIETY
1. A technocratic society
2. Why do we need experts?
3. What do experts provide?
A technocratic society
• Prominent role of experts in a technocratic society (Saint-Simon, 1817)
• Decision-makers selected on the basis of their expertise in specific areas of
decision-making.
• Belief in the merit of…
• applying scientific method to administration and policy making.
• finding technological solutions to societal problems.

• Related to:
• Bureaucratic state (Max Weber, 1922)
• Managerial society (James Burnham, 1941)
• Post-industrial economy (Daniel Bell, 1974, Alain Touraine, 1971).
Why do we need experts?
• Experts needed in many areas because of
• complexity of the operation of modern States and large companies,
• complicated technology,
• lack of experience with infrequent, remote, specialized decisions.

• What people want from experts (Stehr and Grundmann, 2011)

• Reduction in uncertainty about the future.
• Reduction in complexity of problems
• Advice that is transparent and easy to understand.
• Simple and direct solutions.
• Reassurance, legitimization and support (Dalal & Bonaccio, 2010).
 Demand ↔ Offer
What decision-makers want
Certainty
Control over decisions
Simple solutions
Understandable advice
Personally adapted solutions
Confirmation of beliefs
Support for own decisions
Quick results
What advisers offer
Uncertainty
Delegation of decisions
Complex plans of actions
Specialized technical knowledge
General recommendations
New information
Alternative possibilities
Long term plans
Why do we need trust in experts?
• Many claims made by experts are unverifiable by those outside their
field of expertise.
• Mistakes and lies by experts may not be found out and punished.
• One may never convincingly prove the expert lied (credence goods, Dulleck &
Kerschbamer, 2006; Dulleck, Kerschbamer, & Sutter, 2011, Balafoutas et al.,
2013).
• For an abuse to be exposed, we need to trust that “someone” is keeping
experts accountable.
• “Quis custodiet ipsos custodes?” (Juvenal, c.110, O'Neill, 2002)
• Other experts, media, police, auditors, regulatory authorities…
 DIAGNOSIS: LOW
TRUST IN EXPERTS
1. Unpopular rule by experts
2. Low trust in a range of experts
3. Rise of populist parties
4. Decision-makers often do not seek or follow expert advice
Rule by experts is not popular
• Rule by experts is not popular (Pew Research Center, October, 2017)
• However, still preferred to dictatorship or military rule…
Rule by experts is not popular
Low trust in institutions and their
leaders.
• 2018 Edelman Trust Barometer for Germany
• 40% of Germans trust Government, Media, Business, NGOs.
• Lowest ratings for journalists, government officials and regulators, business
leaders.
• Only technical and academic experts are more likely to be trusted than “a
person like yourself”.
Rise of populist parties and
disinformation.
• Rise of populist parties
• Trump in the US, AfD in Germany, National Front in France, Northern League
and Five Star Movement in Italy, UK Independence Party in the UK.
• Populists have low trust in institutions
• Oppose “the popular will” with the rule of “the cosmopolitan liberal elite“
(Canovan, 1999, Oliver & Rahn, 2016).
• “The people of this country have had enough of experts” (Conservative MP
Michael Gove during Brexit campaign)
• Diffusion of conspiracy theories (Sunstein & Vermeule, 2009).
Distrust of science
• Spread of distrust in scientific recommendations
• On climate change
• On vaccination
• On genetically modified organisms
• On nutrition
• On evolution

(Van der Linden & Lewandowsky, 2015, Nichols, 2017, Rutjens et al. 2018)
WHY DO PEOPLE NOT
TRUST IN EXPERTS?
1. Failures of regulatory institutions
2. Ineffective policy advice
3. Biased personal advice
4. Crisis in the sciences
Failures of regulatory institutions
• 2008-2009: Financial crisis (Crotty, 2009, Roth, 2009)
• Bad regulatory oversight, under-estimated systemic risk, biased credit rating
agencies and auditors (Sikka, 2009, White, 2010)
• 2010-2014: Greek Financial Crisis
• Loss of trust in European institutions (Roth, 2009)
• 2011-2015: Scandal about plagiarism in doctoral dissertations
(Gutenberg).
• 2013: Scandal about fraud in organ transplants.
• 2018: Scandal about diesel emissions tests (VW)
Other failures of expertise
• Economic policy seen to benefit large banks, large corporations and the
wealthy (Pew Research Center, 2015)
• Misleading financial advice (Mullainathan, Noeth & Schoar, 2012)
• Deceptive and confusing offers (Gabaix & Laibson, 2006, Ellison & Ellison,
2009, Gaudeul & Sugden, 2012, Heidhues et al., 2016)
• Replication crisis in the social sciences (Open Science Collaboration, 2015,
Camerer et al, 2018)
CLASSIFICATION OF
CAUSES
1. Wrong advice, ex-post or ex-ante.
2. Consensual or conflicting advice
3. Biased or neutral advice
4. Inapplicable and unwelcome advice
Wrong advice, ex-post or ex-ante.
• Even correct advice can be wrong ex-post.  disappointment (Gul, 1991).
• Failure to educate people about uncertainty (Tauritz, 2012)
• E.g. financial advice on investments, house buying, borrowing.
• Overconfident experts (Angner, 2006)
• Failure in anticipating extent of uncertainty in prediction: calibration
• Failure to anticipate issues
• Wrong models, wrong assumptions, misdirected research (Colander et al, Ch. 13
in Lanteri & Vromen, 2014)
• e.g. diesel engines, nuclear plants, insecticides, asbestos, opioid prescriptions,
lead in paint, etc...
 Wrong advice, ex-post or ex-ante.
Over-confident
prediction

Biased
Probability

Correct distribution prediction

ex-ante

Unpredicted result

Values
24
Consensual or conflicting advice
• Problem when experts conflict
• Generates uncertainty and thus anxiety (Carleton, 2016).
• E.g. “wicked problems” without clear solutions, such as immigration, climate
protection, diets, fitness, addictions.
• Problem when experts agree
• Herding (Banerjee, 1992).
• This leads to lack of responsiveness to new information & slow response to
crises and citizens’ concerns.
Biased advice
• Biased, self-serving advice
• E.g. medical doctors sponsored by pharmaceutical firms (Thompson, 1993),
• E.g. financial products biased towards high-commission products (Oehler and
Kohlert, 2009, Mullainathan et al., 2012, Anagol & Sarkar, 2017)
• Perception of bias leads people to discount advice (Choo, 1964).
• This leads to even more biased advice (Chung & Harbaugh, 2018).
• e.g. warning of catastrophe in case of Brexit (“project Fear”)...
Biased advice
• Neutral advice may be impossible
• Because experts differ from most people (Sapienza & Zingales, 2013)
• Because experts may be paid by different people than those they advise 
conflicts of interests.
Inapplicable and unwelcome advice
• Unhelpful and unrealistic advice that is difficult to follow
• E.g. drive slower, stop using plastic, do not look at your investments…
• E.g. nutrition (Kearney & McElhone, 1999), medication adherence (Brown &
Bussel, 2011), education of kids, vaccination, politics, climate change.
• Unwelcome, unsolicited advice (Fitzsimons & Lehmann, 2004, Sugden,
2016)
 Information avoidance (Golman, Hagmann and Loewenstein, 2017)
 SOLUTIONS TO A
“WICKED” PROBLEM
What can be done to promote trust in
experts?
• A “wicked problem” (Rittel & Webber, 1973)
• Whichever way you try to solve the issue, you make it worse in another way.
• Many conflicting objectives:
1. Project authority and confidence and yet make aware of uncertainty.
2. Be neutral and yet have experience.
3. Give personal advice and yet reach many.
4. Change behavior and yet respect preferences of advisee.
Project confidence or explain
uncertainty?
• People trust confident advisers more than those who admit uncertainty
• Sniezek & Buckley, 1995; Sniezek & Van Swol, 2001, Peterson & Pitz, 1988;
Zarnoth & Sniezek, 1997
• Therefore, experts who admit uncertainty are not followed.

• However, advisers who project confidence and are wrong are punished
more than those who are less confident.
• Tenney et al, 2007, Tenney, Spellman & McCoun, 2008
Project confidence or explain
uncertainty?
• Possible solutions:
• Track adviser accuracy over time (McCoun, 2015)
• Educate advisees about uncertainty (Tauritz, 2012)
• Why not following the advice does not necessarily mean doing badly.
• Why following advice does not necessarily lead to doing well.
• Better representation and explanation of uncertainty (example next slide).
Better representation of uncertainty.
Promote neutral advice?
• Advisers often face conflicts of interests.
• Making aware of biases does not help as:
• Advisers do not recognize own bias (Sah, 2012)
• Advisees do not correct for bias (De Meza et al, 2010, Ismayilov & Potters, 2013)
• Disclosing bias makes advisers feel allowed to be even more biased
(Loewenstein et al, 2011)
• Solutions:
• Seek second opinions? (Sah & Loewenstein, 2015)
• Aggregate advice from different sources?

 own project with Gangl and Kulke.

Give advice in person and yet remain
accessible.
• In person advice is more likely to be taken up.
• E.g. behavioral counseling to quit smoking (Orleans et al, 1991), promoting
adherence to long-term therapies (Sabate, World Health Organization, 2003).
• However giving advice in person is time-consuming.
• So personal advice is available only to the rich, or for problems that can be
solved quickly.
• Not for the poor, very costly for behavioral issues.

• Possible solution: Robo-advisers with automated advice

 own project with Crosetto and Giannetti

Change or respect preferences?
• Should advice address wrong beliefs and biases of the advisee?
• Should still be accepted, but people are often overconfident and overvalue their
own initial judgments (Gardner & Berry, 1995; Harvey & Fischer, 1997).
• Solutions:
• Explain reasons for the advice? (Tzioti et al, 2014)
• Explain why intuition is wrong?
• Example: Diversifying, not always best ex-post…
• Example: Winner's curse, why not bid what one believes the good to be worth?
• Give advice gradually, minimize difference between advice and what the person
already believes?
• Nudges  influence action without explaining reasons.

 own work with Kaczmarek.

OWN WORK AND
PROJECTS
1. Do nudges respect people’s preferences?
2. Robo-advisers for financial advice
3. Feedback systems and their impact on experts
Nudges and social preferences
• Nudges are a tool to convey advice in a way that is “respectful of people’s
own preferences”
• Orient people towards the “correct” decision without forbidding alternatives
(Camerer et al, 2003, Sunstein & Thaler, 2003).
• A cost effective alternative to giving information or training people (Webb &
Sheran, 2006).
• However, are nudges only a temporary barrier to one’s inclinations?
• Nudges, even applied over long periods, do not seem to change preferences
(Allcott & Rogers, 2014).
• In Gaudeul & Kaczmarek, 2018, forthcoming, we elicit attitudes to and
motivation to follow the nudge and exploits attrition in our subject pool as a
measure of motivation.
Nudges and social preferences
• In a treatment, we “nudge” decision makers to make a donation.
• Those who promise to donate in this treatment are less likely to translate
this into actual donations.
• Overall, the total amount of the donation is therefore not different
between the treatments.
• This means that “nudges” may be self-defeating.

41
Nudges and social preferences
Nudges and social preferences
Robo-advisers for behavioral issues
• Algorithm delivering „optimal“ advice given elicited preferences
• E.g. elicit opinion on range of social and economic issues, return closest
candidate in elections.
• E.g. elicit risk aversion, patience, goals, etc, return investment
recommendations.
• E.g. analyze past purchases and tastes, return possible purchases.

• Issue: „Algorithm aversion“ (Önkal et al, 2009)

• People do not use algorithms as much as they should.
• Avoid robo-advisers more often than human adviser (Dietvorst, Simmons &
Massey, 2015).
• But use it more if can get some control over its decisions (Dietvorst, Simmons &
Massey, 2016).
Robo-advisers for behavioral issues
• Own project
• €10,000 under Think Forward Initiative funded by ING Bank, with Giannetti and
Crosetto.
• Investigate possible form of a Dunning-Kruger effect (1999).
• The more you need advice, the less you think you need it (Mahnwesen, 2018,
Yan & Mahnwesen, 2018, Mahnwesen und Kegel, 2018, Kramer, 2016, Calcagno
& Monticone, 2015).
• Indeed, “individuals with higher incomes, educational attainment, and levels of
financial literacy are most likely to receive financial advice.” (Collins, 2012)
Robo-advisers for behavioral issues
• Extend this finding to the use of (robo-)advisers for behavioral issues in
financial investment decisions.
• Offer robo-advisers as a way to commit to an investment strategy.
• Identify those most in need of a way to commit.
• Look at whether those people indeed use the robo-adviser.
• Look at whether soft commitments can enhance use of commitment devices
(Bryan, Karlan & Nelson, 2010).
 Who takes advice?
Actual accuracy
Seek advice Do not seek advice
Level of and need it and need it
expertise
(accuracy) Beliefs about
accuracy

Accuracy
of adviser

Individuals
Dunning-Kruger effect cannot explain why people with low accuracy do not seek advice.
47
 Who takes advice?
Actual accuracy
Seek advice Do not seek advice
Level of and need it and need it
expertise
(accuracy) Beliefs about
accuracy

Accuracy
of adviser

Belief about
accuracy
of adviser

Individuals
People with low accuracy who do not seek advice must also believe the adviser has low accuracy.
48
Psychological impact of feedback
systems
• Feedback systems are omnipresent on the Internet, for products as well
as for services.
• Aggregate experience of users, on what matters to them.
• How does feedback impacts advisers.
• Project with Katharina Gangl and Louisa Kulke
• Emotional impact of feedback (anger, happiness, sadness, …).
• Effect on subsequent performance of adviser.
• Effect of shame & embarrassment.
Psychological impact of feedback systems

50
SUMMARY AND
CONCLUSION
Summary
• Experts need to learn to recognize and consider their limitations and the
limitations of the recipients of their advice.
• Experts must also be aware of the need to maintain a balance between
conflicting goals:
• be neutral and be involved.
• be precise and convey uncertainty.
• suggest improvements, but consider the goals and limitations of the advisee.
• personalize advice, but also automate it.

53
Summary
• Own research questions…
• how far "nudges" respect people's preferences.
• whether advice can follow algorithms and still feel personal.
• whether performance feedback can discipline experts.

54
Conclusion
• Confidence in experts is important in a liberal democracy.
• But a degree of distrust may be needed to discipline the experts (MacCoun,
2015).
• Towards a more populist form of democracy.
• Participations outside the scientific community in scientific debates.
• It is necessary to further define the rules and methods in this more public
debate.
• Need for better demarcation between...
• scientific evidences.
• social implications.
• political solutions.

55
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