IDEAS home Printed from https://ideas.repec.org/a/eee/joreco/v55y2020ics0969698919309567.html
   My bibliography  Save this article

Consumer resistance and inertia of retail investors: Development of the resistance adoption inertia continuance (RAIC) framework

Author

Listed:
  • Seth, Himanshu
  • Talwar, Shalini
  • Bhatia, Anuj
  • Saxena, Akanksha
  • Dhir, Amandeep

Abstract

Consumer resistance and inertia related behaviors are as important as adoption behaviors. Resistance can lead to unwillingness on the part of the investors to invest in a particular financial product. On the other hand, inertia can potentially lead to loyalty, despite dissatisfaction with a financial product. Consequently, an understanding of the antecedents and outcomes of retail investors’ resistance and inertia toward investments is valuable for firms selling investment products. Although the literature on resistance and inertia is around three decades old, empirical research related to retail investment decision making has only recently gained momentum, resulting in limited but interesting findings. The current study utilizes a systematic literature review (SLR) methodology to review prior studies in this domain. The SLR presents research profiling and an extensive content analysis of the studies selected by applying a robust search protocol. The study findings highlight numerous aspects of retail investment behavior, underscore research gaps in the prior literature, and offer recommendations for future research. Furthermore, a comprehensive framework, labelled resistance adoption inertia continuance (RAIC), is proposed to investigate the behavior of retail investors. The study concludes with meaningful theoretical and practical implications that can help counter resistance and inertia toward different financial products.

Suggested Citation

  • Seth, Himanshu & Talwar, Shalini & Bhatia, Anuj & Saxena, Akanksha & Dhir, Amandeep, 2020. "Consumer resistance and inertia of retail investors: Development of the resistance adoption inertia continuance (RAIC) framework," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
  • Handle: RePEc:eee:joreco:v:55:y:2020:i:c:s0969698919309567
    DOI: 10.1016/j.jretconser.2020.102071
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969698919309567
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jretconser.2020.102071?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Galliera, Arianna, 2018. "Self-selecting random or cumulative pay? A bargaining experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 72(C), pages 106-120.
    2. Anis Khedhaouria & Roy Thurik & Calin Gurau & Eric Van Heck, 2016. "Customers' Continuance Intention Regarding Mobile Service Providers: A Status Quo Bias Perspective," Post-Print hal-02012305, HAL.
    3. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    4. Lukas, M., 2019. "Relative prices and product substitution: Evidence from shocks to consumer credit interest rates," Journal of Behavioral and Experimental Finance, Elsevier, vol. 21(C), pages 39-49.
    5. Baltussen, Guido & Post, Gerrit T., 2011. "Irrational Diversification: An Examination of Individual Portfolio Choice," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(5), pages 1463-1491, October.
    6. Sheridan Taylor & Roger Taylor, 2016. "The Effect of Style, Feedback, and Context on Portfolio Exploratory Behavior," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 17(3), pages 217-228, July.
    7. Talpsepp, Tõnn & Vlcek, Martin & Wang, Mei, 2014. "Speculating in gains, waiting in losses: A closer look at the disposition effect," Journal of Behavioral and Experimental Finance, Elsevier, vol. 2(C), pages 31-43.
    8. Fisch, Jill E. & Wilkinson-Ryan, Tess, 2013. "Why do retail investors make costly mistakes? An experiment on mutual fund choice," CFS Working Paper Series 2013/23, Center for Financial Studies (CFS).
    9. Utpal Bhattacharya & Andreas Hackethal & Simon Kaesler & Benjamin Loos & Steffen Meyer, 2012. "Is Unbiased Financial Advice to Retail Investors Sufficient? Answers from a Large Field Study," The Review of Financial Studies, Society for Financial Studies, vol. 25(4), pages 975-1032.
    10. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    11. Samuelson, William & Zeckhauser, Richard, 1988. "Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
    12. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
    13. George Apostolakis & Gert Van Dijk & Robert J. Blomme & Frido Kraanen & Athanasios P. Papadopoulos, 2018. "Predicting pension beneficiaries’ behaviour when offered a socially responsible and impact investment portfolio," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 8(3), pages 213-241, July.
    14. Banks, James & Crawford, Rowena & Tetlow, Gemma, 2015. "Annuity choices and income drawdown: evidence from the decumulation phase of defined contribution pensions in England," Journal of Pension Economics and Finance, Cambridge University Press, vol. 14(4), pages 412-438, October.
    15. Lisa R. Anderson & Beth A. Freeborn & Jason P. Hulbert, 2018. "Behavioral Factors in Equity Allocation Decisions: A Large-Scale Experimental Study With Context," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 19(3), pages 334-348, July.
    16. Darren Duxbury, 2015. "Behavioral finance: insights from experiments I: theory and financial markets," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 7(1), pages 78-96, June.
    17. Afik, Zvika & Lahav, Yaron, 2015. "Thinking near and far: Modeling the formation of traders’ beliefs in asset markets using experimental data," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 57(C), pages 73-80.
    18. Magnus Dahlquist & José Vicente Martinez, 2015. "Investor Inattention: A Hidden Cost of Choice in Pension Plans?," European Financial Management, European Financial Management Association, vol. 21(1), pages 1-19, January.
    19. Kim, Hugh Hoikwang & Maurer, Raimond & Mitchell, Olivia S., 2016. "Time is money: Rational life cycle inertia and the delegation of investment management," Journal of Financial Economics, Elsevier, vol. 121(2), pages 427-447.
    20. Huberman, Gur, 2001. "Familiarity Breeds Investment," The Review of Financial Studies, Society for Financial Studies, vol. 14(3), pages 659-680.
    21. Gathergood, John, 2012. "Self-control, financial literacy and consumer over-indebtedness," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 590-602.
    22. Phan, Thuy Chung & Rieger, Marc Oliver & Wang, Mei, 2018. "What leads to overtrading and under-diversification? Survey evidence from retail investors in an emerging market," Journal of Behavioral and Experimental Finance, Elsevier, vol. 19(C), pages 39-55.
    23. Ray R. Sturm, 2014. "A Turning Point Method For Measuring Investor Sentiment," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 15(1), pages 30-42, January.
    24. Darren Duxbury, 2015. "Behavioral finance: insights from experiments II: biases, moods and emotions," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 7(2), pages 151-175, November.
    25. Apostolakis, George & Kraanen, Frido & van Dijk, Gert, 2016. "Examining pension beneficiaries’ willingness to pay for a socially responsible and impact investment portfolio: A case study in the Dutch healthcare sector," Journal of Behavioral and Experimental Finance, Elsevier, vol. 11(C), pages 27-43.
    26. Tse, Alan & Friesen, Lana & Kalaycı, Kenan, 2016. "Complexity and asset legitimacy in retirement investment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 60(C), pages 35-48.
    27. Corbet, Shaen & Lucey, Brian & Urquhart, Andrew & Yarovaya, Larisa, 2019. "Cryptocurrencies as a financial asset: A systematic analysis," International Review of Financial Analysis, Elsevier, vol. 62(C), pages 182-199.
    28. Sergio Da Silva & Newton Da Costa Jr & Raul Matsushita & Cristiana Vieira & Ana Correa & Dinorá De Faveri, 2018. "Debt of high-income consumers may reflect leverage rather than poor cognitive reflection," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 10(1), pages 42-52, March.
    29. Heidenreich, Sven & Kraemer, Tobias, 2015. "Passive innovation resistance: The curse of innovation? Investigating consequences for innovative consumer behavior," Journal of Economic Psychology, Elsevier, vol. 51(C), pages 134-151.
    30. Kirk, Colleen P. & McSherry, Bernard & Swain, Scott D., 2015. "Investing the self: The effect of nonconscious goals on investor psychological ownership and word-of-mouth intentions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 58(C), pages 186-194.
    31. Ye, Ben Haobin & Barreda, Albert A. & Okumus, Fevzi & Nusair, Khaldoon, 2019. "Website interactivity and brand development of online travel agencies in China: The moderating role of age," Journal of Business Research, Elsevier, vol. 99(C), pages 382-389.
    32. Shane Frederick, 2005. "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 25-42, Fall.
    33. Sven Heidenreich & Patrick Spieth, 2013. "Why Innovations Fail — The Case Of Passive And Active Innovation Resistance," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 17(05), pages 1-42.
    34. John R. Graham & Alok Kumar, 2006. "Do Dividend Clienteles Exist? Evidence on Dividend Preferences of Retail Investors," Journal of Finance, American Finance Association, vol. 61(3), pages 1305-1336, June.
    35. Alistair Byrne & David Blake & Graham Mannion, 2010. "Pension Plan Decisions," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 2(1), pages 19-36, April.
    36. Imed Medhioub & Mustapha Chaffai, 2018. "Islamic finance and herding behavior: an application to Gulf Islamic stock markets," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 10(2), pages 192-206, June.
    37. Shih-Wei Wu & Juli Dutta & Chin-Yu Huang, 2018. "The systematic biases in decision-making in the mutual-fund markets: Market states and disposition effect," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1537538-153, January.
    38. Ihli, Hanna Julia & Gassner, Anja & Musshoff, Oliver, 2018. "Experimental insights on the investment behavior of small-scale coffee farmers in central Uganda under risk and uncertainty," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 75(C), pages 31-44.
    39. Murphy, Ryan O. & Andraszewicz, Sandra & Knaus, Simon D., 2016. "Real options in the laboratory: An experimental study of sequential investment decisions," Journal of Behavioral and Experimental Finance, Elsevier, vol. 12(C), pages 23-39.
    40. David Blanchett & Michael Finke & Michael Guillemette, 2018. "The Effect of Advanced Age and Equity Values on Risk Preferences," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 19(4), pages 434-441, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francisco Gomes & Michael Haliassos & Tarun Ramadorai, 2021. "Household Finance," Journal of Economic Literature, American Economic Association, vol. 59(3), pages 919-1000, September.
    2. Robinson, Peter John & Botzen, W. J. Wouter & Kunreuther, Howard & Chaudhry, Shereen J., 2021. "Default options and insurance demand," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 39-56.
    3. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    4. Camille Magron & Maxime Merli, 2012. "Stocks repurchase and sophistication of individual investors," Working Papers of LaRGE Research Center 2012-02, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    5. Bowman, David & Minehart, Deborah & Rabin, Matthew, 1999. "Loss aversion in a consumption-savings model," Journal of Economic Behavior & Organization, Elsevier, vol. 38(2), pages 155-178, February.
    6. Miklós Antal & Ardjan Gazheli & Jeroen C.J.M. van den Bergh, 2012. "Behavioural Foundations of Sustainability Transitions. WWWforEurope Working Paper No. 3," WIFO Studies, WIFO, number 46424.
    7. Fershtman, Chaim, 1996. "On the value of incumbency managerial reference points and loss aversion," Journal of Economic Psychology, Elsevier, vol. 17(2), pages 245-257, April.
    8. Sandri, Serena & Schade, Christian & Mußhoff, Oliver & Odening, Martin, 2010. "Holding on for too long? An experimental study on inertia in entrepreneurs' and non-entrepreneurs' disinvestment choices," Journal of Economic Behavior & Organization, Elsevier, vol. 76(1), pages 30-44, October.
    9. Mercè Roca & Robin Hogarth & A. Maule, 2006. "Ambiguity seeking as a result of the status quo bias," Journal of Risk and Uncertainty, Springer, vol. 32(3), pages 175-194, May.
    10. Masiero, Lorenzo & Qiu, Richard T.R., 2018. "Modeling reference experience in destination choice," Annals of Tourism Research, Elsevier, vol. 72(C), pages 58-74.
    11. Hwang, In Do, 2021. "Prospect theory and insurance demand: Empirical evidence on the role of loss aversion," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 95(C).
    12. David Hirshleife, 2015. "Behavioral Finance," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 133-159, December.
    13. Gerald Spindler, 2011. "Behavioural Finance and Investor Protection Regulations," Journal of Consumer Policy, Springer, vol. 34(3), pages 315-336, September.
    14. Grüner, S. & Fietz, A., 2014. "Chancen, Grenzen und Barrieren staatlicher Regulierungspolitik – Eine verhaltensökonomische Betrachtung unter Berücksichtigung des individuellen landwirtschaftlichen Unternehmensverhaltens," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 49, March.
    15. Heribert Gierl & Hans Höser, 2002. "Der Reihenfolgeeffekt auf Präferenzen," Schmalenbach Journal of Business Research, Springer, vol. 54(1), pages 3-18, February.
    16. Eduard Marinov, 2017. "The 2017 Nobel Prize in Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 117-159.
    17. Kubińska, Elżbieta & Adamczyk-Kowalczuk, Magdalena & Andrzejewski, Mariusz & Rozakis, Stelios, 2022. "Incorporating the status quo effect into the decision making process: The case of municipal companies merger," Socio-Economic Planning Sciences, Elsevier, vol. 84(C).
    18. Sawa, Ryoji & Wu, Jiabin, 2018. "Prospect dynamics and loss dominance," Games and Economic Behavior, Elsevier, vol. 112(C), pages 98-124.
    19. Matthias Buchholz & Oliver Musshoff, 2021. "Tax or green nudge? An experimental analysis of pesticide policies in Germany [A psychological study of the inverse relationship between perceived risk and perceived benefit]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(4), pages 940-982.
    20. Víctor Alberto Pena & Alina Gómez-Mejía, 2019. "Effect of the anchoring and adjustment heuristic and optimism bias in stock market forecasts," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 11(2), pages 389-409, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joreco:v:55:y:2020:i:c:s0969698919309567. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing-and-consumer-services .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.