PhD defence D.G. (Dominic) van Kleef

Below is a brief summary of the dissertation: 

European investor protection law has traditionally been based on the notion of the largely rational investor. Within this legal framework, individual investors are expected to understand (often complex) information about financial instruments and services, accurately assess the associated risks, and make informed decisions based on that information. Responsibility for making prudent investment choices is largely placed on the investor.

Behavioural economic research, however, increasingly demonstrates that investors often behave differently than the law assumes. They are not always able to fully grasp the complexity of financial markets, tend to focus on the short term, and are susceptible to various private influence techniques, particularly in online investment environments. In recent years, policymakers and legislators – both in Brussels and at the national level – have come to recognize that financial regulation can be more effective if it takes such behavioural insights into account.

Translating relevant behavioural insights into investor protection law raises a number of important questions. To what extent should individual investors be protected against their own psychological pitfalls? How far does their own responsibility extend? And to what degree can or should firms be expected to guide their clients toward sound financial choices?

This dissertation aims to map the implications of a more systematic integration of behavioural insights and to provide a structured framework for how these insights could be incorporated into European investor protection law.