Persuasion in financial advertising: Behavioral or rational?

In this paper we test whether a behavioral or a rational model is used in financial advertising. We run Granger-causality tests separately for risky and non-risky products advertising, finding that the behavioral model of advertising is supported when the ads of risky financial products and services are considered, while the rational model is true for the non-risky products ads. We ascribe this result to the dual process of reasoning operating at the level of the investor: when an investor evaluates the decision to buy risky financial products and services, he/she activates the automatic, rapid decision making process. Advertising companies anticipate this trait and implement an advertising strategy that responds to market trends, confirming the use of a behavioral model. Consistently we find that the stock index Granger-causes risky financial products ads. When non-risky financial products ads are considered, a slow and sequential process, operates, compatibly with a rational decision making process: advertising companies are aware of this and implement a strategy unrelated to the stock index. Coherently, no significant relationship is found between the stock index and non-risky financial products and services ads.