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The influence of horizontal and vertical product attribute information on decision making under risk: The role of perceived competence

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  • Min, Dong-Jun
  • Cunha, Marcus

Abstract

Classical decision theory assumes that risk is negatively associated with the attractiveness of an option. Thus, it is not surprising that individuals may seek to reduce the level of risk associated with a purchase by choosing a product based on information that allows a direct evaluation of objective value. This research proposes that, under risk, individuals prefer to utilize information that they perceive themselves to be more knowledgeable as a result of a tendency toward favorable perceptions of their own competence, which could lead to choices with negative implications for one's own experienced utility. We demonstrate that, under higher levels of risk, decision makers increase their reliance on attributes that reflect their own personal preference (i.e., horizontal attributes) rather than on attributes that unambiguously indicates a superior product (i.e., vertical attributes) when making a choice. This result is reversed when knowledge about vertical attributes is increased.

Suggested Citation

  • Min, Dong-Jun & Cunha, Marcus, 2019. "The influence of horizontal and vertical product attribute information on decision making under risk: The role of perceived competence," Journal of Business Research, Elsevier, vol. 97(C), pages 174-183.
  • Handle: RePEc:eee:jbrese:v:97:y:2019:i:c:p:174-183
    DOI: 10.1016/j.jbusres.2018.12.078
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