According to research from Stanford, the FINRA Foundation, and AARP, inducing
older adults’ emotions increases the risk of them buying falsely
advertised investments. Brokers who participate in misconduct often use
the emotions of the victims to induce transactions. Seniors may be particularly
susceptible to fraud.
The study examined the impact that excitement and anger has on one’s
decision making when it comes to fraud. The research determined susceptibility
in older adults between 65 and 85 years old and younger adults between
30 and 40 years old. After inducing excitement or anger in one group and
not inducing any particular emotion in the other group, participants were
shown various advertisements designated as misleading by the Federal Trade
Commission. They were then asked to rate the believability of each ad
and the likelihood to purchase it.
The research shows an increased intention to purchase in the older adults
who had their emotions induced compared to the other group. In the younger
adults, emotions did not play as much of a role in the decision to purchase.
This means that heightened emotions don’t affect young adult investors
as opposed to older adults.
Emotions induced were both positive and negative, but the direction of
the emotion did not matter in the decision making.
At Meyer Wilson, we are dedicated to protecting elderly investors. You
should be aware of the various methods fraudsters may use to induce securities
transactions and investments. If you lost money due to investment misconduct,
our securities fraud lawyers may be able to help you recover your losses.
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