Felix Zhang

Social Proof Influences: on Investor Choice Felix Zhang

This research work represents an original model of social proof advertising effect on investor choice under financial risk. It models investor updating of personal information signals with the public signals provided by advertisements where the weight with which the individual considers each signal is described by a social proof effect. Ultimately this thesis suggests that social proof advertising is effective even in the context of mutual fund advertising and situations of higher risk. I would like to thank my advisor Prof. Malcolm Baker for providing the inspiration and support that made this thesis possible. I would also like to acknowledge Katie Baldiga for all her assistance and guidance throughout this process and Professors David Laibson and Andrei Shleifer for their advice and contributions to this thesis. Finally I want to thank my family and friends who never failed to support me in this and any other endeavor.