 The effects of reference point, knowledge, and risk propensity on the evaluation of financial productsKyoung-Nan Kwon and Jinkook Lee Journal of Business Research, 2009, vol. 62, issue 7, 719-725 Abstract: Evaluating and choosing a financial product often requires a trade-off between risk and returns on investment, as a riskier product may yield a higher return. We examine the effect of different reference points (i.e., a riskier reference vs. a safer reference) on the evaluation of a financial product when attributes are explicitly traded off during the evaluation. Our findings suggest that a safer reference increases the attractiveness of the focal product under evaluation, while a riskier reference point does not affect that evaluation. The safer reference point appears to facilitate the risk-seeking tendency in financial decision-making. Further, two types of consumer knowledge, namely, objective and subjective, can moderate the effect of the reference point. Subjective knowledge negatively affects attribute-based objective evaluations, promoting instead the use of external reference information. A discrepancy between the two types of knowledge (i.e., over-confidence), in particular, can cause a more biased evaluation. Keywords: Reference; point; Objective; knowledge; Subjective; knowledge; Risk; propensity (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:62:y:2009:i:7:p:719-725 Access Statistics for this article Journal of Business Research is currently edited by A. G. Woodside More articles in Journal of Business Research from Elsevier |
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