Business-Economics-Management Seminar

17/12/2013 - 13:00


Dr. Liat Hadar

Assistant Professor of Marketing
Arison School of Business
IDC Herzliya



Subjective Knowledge in Consumer Financial Decisions


We propose that attempts to increase consumers’ objective knowledge (OK) concerning financial instruments can deter willingness to invest when such attempts diminish consumers’ subjective knowledge (SK). In four studies, using different SK manipulations and investment products, we show that investment decisions are influenced by SK independent of OK. Specifically, willingness to pursue a risky investment increases when SK is high (versus low) relative to a prior investment choice (Study 1); willingness to enroll in a retirement saving program is enhanced by asking consumers an easy (versus difficult) question about finance thereby increasing SK (Study 2); technically elaborating information concerning a mutual fund diminishes SK concerning that investment and decreases choice of that fund (Study 3); and consumers invest less money in funds when missing information is made salient, holding the objective investment information constant (Study 4). Further, the effects in Studies 2 to 4 are mediated by participants’ self-rated SK.  We propose that effective financial education must focus not only on imparting relevant information and enhancing OK, but also on promoting higher levels of SK.