Wiser For Others? When Delegated Financial Decision-Making Outperforms Self-Directed Choice

While neo-classical finance assumes rational decision-making that maximises a decision maker’s expected utility function, novel research demonstrates that the cognitive biases of loss aversion, omission bias, and regret aversion distort individual financial choices. Synthesising experimental evidence from behavioural economics, medical decision-making, and social psychology, this paper builds a unified cross-bias framework examining whether delegated financial decision-making can mitigate these biases. The analysis finds that delegation improves decision quality conditionally: mitigating loss aversion requires accountability from the delegate; reducing omission bias requires explicitly defined roles; attenuating regret aversion requires insulation from real-time client observation. These findings challenge conventional financial advisory design and propose structures under which delegation can outperform self-directed financial choice.