To read this content please select one of the options below:

Can virtual reality nudge toward green investing? An experiment with small business entrepreneurs

Achilleas Vassilopoulos (Department of Agricultural Economics and Development, Agricultural University of Athens, Athens, Greece)
Lydia Papadaki (Sustainable Development Unit, Athena Research and Innovation Center in Information Communication and Knowledge Technologies, Athens, Greece)
Phoebe Koundouri (Department of International and European Economic Studies, Athens University of Economics and Business, Athens, Greece) (Sustainable Development Unit, Athena Research and Innovation Center in Information Communication and Knowledge Technologies, Athens, Greece) (Department of Technology, Management and Economics, Danmarks Tekniske Universitet, Kongens Lyngby, Denmark)

Review of Behavioral Finance

ISSN: 1940-5979

Article publication date: 23 August 2023

Issue publication date: 5 March 2024

333

Abstract

Purpose

Storytelling through virtual reality (VR) combines the strengths of cutting-edge technology with traditional informational campaigns. As a tool for climate change mitigation, VR has been shown to educate individuals and stimulate both emotional and cognitive responses that promote pro-environmental behavior. This paper aims to investigate whether these benefits extend to the field of green investing through an experiment conducted with a sample of small business entrepreneurs.

Design/methodology/approach

The experimental design involved making choices between bonds varying in maturity dates, annual interest and environmental classification (regular versus green). To identify potential impacts of the immersive experience on investment decisions, these choices were made both before and after exposure to VR videos illustrating the devastating effects of climate change. A multiple price list was employed to elicit subjects' risk preferences, enabling the joint estimation of the treatment effect and the risk and time preference parameters.

Findings

The findings indicate that, when risk and time preference parameters are controlled for, a VR experience can nudge toward green investment choices. This effect is more profound among those who already exhibit a greater propensity to opt for green investments.

Originality/value

Previous research shows that negative emotions, such as guilt, affect pro-environmental intentions, as well as actions, while message vividness through immersive experiences is effective in nudging greener behavior. Since analogous results in the framework of financial investments are not currently available, this paper seeks to test whether VR videos depicting the adverse effects of climate change can generate negative emotions associated with experiencing these effects and make them salient in subsequent investment decisions made by small business entrepreneurs.

Keywords

Acknowledgements

This research was realized in the framework of the European project Circular Learning Hub (CL-hub): A learning hub for the engagement and ecosystem transition towards circular thinking funded by EIT Climate-KIC for 2019-2020.

Citation

Vassilopoulos, A., Papadaki, L. and Koundouri, P. (2024), "Can virtual reality nudge toward green investing? An experiment with small business entrepreneurs", Review of Behavioral Finance, Vol. 16 No. 2, pp. 322-340. https://doi.org/10.1108/RBF-01-2023-0005

Publisher

:

Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

Related articles