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Digital customization of consumer investments in multiple funds: virtual integration improves risk–return decisions

Journal of the Academy of Marketing Science, 2021-07, Vol.49 (4), p.723-742 [Peer Reviewed Journal]

The Author(s) 2020 ;COPYRIGHT 2021 Springer ;The Author(s) 2020. This work is published under http://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;ISSN: 0092-0703 ;EISSN: 1552-7824 ;DOI: 10.1007/s11747-020-00740-4

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  • Title:
    Digital customization of consumer investments in multiple funds: virtual integration improves risk–return decisions
  • Author: Lim, Sesil ; Donkers, Bas ; van Dijl, Patrick ; Dellaert, Benedict G. C.
  • Subjects: Business and Management ; Consumers ; Customer relations ; Digital communications ; Financial services industry ; Investments ; Management ; Marketing ; Original Empirical Research ; Personal finance ; Services ; Social Sciences ; Technology application
  • Is Part Of: Journal of the Academy of Marketing Science, 2021-07, Vol.49 (4), p.723-742
  • Description: Digital technology in financial services is helping consumers gain wider access to investment funds, acquire these funds at lower costs, and customize their own investments. However, direct digital access also creates new challenges because consumers may make suboptimal investment decisions. We address the challenge that consumers often face complex investment decisions involving multiple funds. Normative optimal asset allocation theory prescribes that investors should simultaneously optimize risk–returns over their entire portfolio. We propose two behavioral effects (mental separation and correlation neglect) that prevent consumers from doing so and a new choice architecture of virtually integrating investment funds that can help overcome these effects. Results from three experiments, using general population samples, provide support for the predicted behavioral effects and the beneficial impact of virtual integration. We find that consumers’ behavioral biases are not overcome by financial literacy, which further underlines the marketing relevance of this research.
  • Publisher: New York: Springer US
  • Language: English
  • Identifier: ISSN: 0092-0703
    EISSN: 1552-7824
    DOI: 10.1007/s11747-020-00740-4
  • Source: ProQuest One Psychology
    Springer Nature OA/Free Journals
    ProQuest Central
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