Consumers' information search when making investment decisions

Abstract

Investment decisions are decisions about future consumption as well as the purchase of intangible goods, which involve both high uncertainty and high perceived risk. Based on the literature on consumers’ information search, this study proposes that the extent of consumers’ information search is influenced by investment-specific individual differences (subjective knowledge, the amount of investment and perceived risk), personal traits (attitudes toward risk and inherent novelty seeking) and demographic characteristics (age, education and income). Consumers’ use of information sources is also investigated; the sources include literature, media, the Internet, friends/family and professional financial services providers. Using data from 2000-01 MacroMonitor, supporting empirical evidence is found for all of the proposed determinants’ impacts on consumers’ information search except education. Subjective knowledge and income are also found to significantly and differently influence consumers’ use of each of the information sources.