Gamble or play it safe? – The effects of self-view on consumer’s goals and choices

What will retirement look like for you? Will you buy that 40-foot sailboat and sail between your summer home in Maine and your winter home in the Caribbean? Or will you plan for three daughters’ weddings, older parents, and other unexpected but unavoidable costs? One scenario pits you as being solidly independent; the other looks pretty interdependent. How consumers make such choices and set goals is the focus of an article in the September 2005 issue of the Journal of Consumer Research.

“Broadly speaking, our results suggest that consumers’ risk preferences are contingent on situational factors. This is in contrast to a great deal of previous research conceptualizing risk preferences as an individual difference variable,” assert Rebecca Hamilton and Gabriel Biehal (University of Maryland).

“We show that encouraging consumers to think about themselves as independent or interdependent, making either promotion or prevention goals salient, has a systematic effect on inferred risk preferences. Interdependent self-view consumers, who are more interested in avoiding losses than in achieving gains, choose less risky alternatives than independent self-view consumers.”

The article is ground-breaking in that it reveals how the decisions that investors make now are emblematic of a history of choices they have made traditionally–findings which have important implications for research related to consumer risk.

“Consumers often make a series of choices in the same domain, each of which can be viewed as continuing an existing pattern of choices (i.e., maintaining the status quo), or starting on a new course. For example, an investor might consider adding money to an existing mutual fund, thereby choosing the status quo alternative, or purchasing a new mutual fund that is more or less risky than the status quo,” conclude the researchers.