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The Role of Regulatory Focus and Information in Investment Choice: Some Evidence Using Visual Cues to Frame Regulatory Focus

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  • Soo Yeong Ewe
  • Ferdinand A. Gul
  • Christina Kwai Choi Lee
  • Chia Yen Yang

Abstract

This study examines the role of regulatory focus and additional information on risk preferences in investment choice using an experimental approach. The findings reveal that situational regulatory focus plays an important role in influencing investment choice. In particular, a congruent promotion-focused image and related message increases risk-taking behavior in terms of choice for stocks rather than fixed deposits, whereas the reverse is true for a congruent prevention-focused image and related message. However, this relationship depends on the amount of information available during the decision-making process, and regulatory focus has a stronger impact on investment choice under the condition without additional financial information.

Suggested Citation

  • Soo Yeong Ewe & Ferdinand A. Gul & Christina Kwai Choi Lee & Chia Yen Yang, 2018. "The Role of Regulatory Focus and Information in Investment Choice: Some Evidence Using Visual Cues to Frame Regulatory Focus," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 19(1), pages 89-100, January.
    • Handle: RePEc:taf:hbhfxx:v:19:y:2018:i:1:p:89-100
    DOI: 10.1080/15427560.2017.1373283
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    Cited by:

    1. Maren Hartmann & Barbara E. Weißenberger, 2024. "Information overload research in accounting: a systematic review of the literature," Management Review Quarterly, Springer, vol. 74(3), pages 1619-1667, September.
    2. Ma, Alfred & Shu, Tse-Mei & Chen, Jieyu & Chau, Man Foon, 2024. "Does the investment performance measure matter? A perspective from regulatory focus theory," Journal of Behavioral and Experimental Finance, Elsevier, vol. 41(C).
    3. Sengupta, Atri & Deb, Soumya Guha & Mittal, Shashank, 2021. "The underlying motivational process behind portfolio diversification choice decisions of individual investors: An experimental design," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).
    4. Kincaid, Paula A. & Short, Jeremy C. & Wolfe, Marcus T., 2022. "Got ink, get paid? Exploring the impact of tattoo visibility on crowdfunding performance," Journal of Business Venturing Insights, Elsevier, vol. 17(C).
    5. Ewe, Soo Yeong & Lee, Christina Kwai Choi & Watabe, Motoki, 2020. "Prevention focus and prior investment failure in financial decision making," Journal of Behavioral and Experimental Finance, Elsevier, vol. 26(C).

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