It’S Not Only What You Know But Also How Knowledgeable You Feel: Subjective Knowledge in Consumer Financial Decisions

We assert that increasing consumers’ objective knowledge (OK) concerning investment opportunities can deter willingness to participate if consumers’ subjective knowledge (SK) is diminished. In three studies we show that, independently of OK, willingness to pursue risky investments increases when less information concerning prior investments is provided; willingness to participate in 401(k) programs increases when consumers are asked an easy financial question; and technically elaborating information concerning a mutual fund diminishes its attractiveness. Further, these effects are mediated by SK level. We propose that methods that enhance SK may be used to aid financial education programs to promote wiser financial decisions.

Citation:

Liat Hadar, Sanjay Sood, and Craig R. Fox (2011) ,"It’S Not Only What You Know But Also How Knowledgeable You Feel: Subjective Knowledge in Consumer Financial Decisions", in AP - Asia-Pacific Advances in Consumer Research Volume 9, eds. Zhihong Yi, Jing Jian Xiao, and June Cotte and Linda Price, Duluth, MN : Association for Consumer Research, Pages: .