Abstract—Risk-taking in investment decision-making is a major means to create individual wealth. Investors search information for risk-reducing strategies in risky investment decision-making. Digital information on financial measures and advice-seeking information are two usual studied variables in information searching. This study extends the information search aspects to discuss heuristics reliance to enrich our understanding of individual risk-taking in investment choices. A test for differences based on income is also conducted. In addition, this article discusses two forms of risky investments, stocks/options investments as well as mutual funds investments. We test our model with a sample of experienced investors by confirmatory factor analysis and hierarchical regression analysis. The results show that heuristics have a strong positive effect on mutual fund investment preferences. An increase of advice-seeking information search significantly increases individual interest in stocks/options investment for high-income investors. Accordingly, implications for financial consultants and ethics issues are discussed as well.
Index Terms—Heuristics, income, information search, investment preference.
Shun-Yao Tseng is with the Department of International Trade, College of Hsing Wu, Taipei, Taiwan.101, Sec.1, Fenliao Rd., Lin Kou Township, Taipei County 244, Taiwan (e-mail: firstname.lastname@example.org).
Cite: Shun-Yao Tseng, "Information Searches Affect Individual Investment Preferences: Testing a Moderating Effect of Income," International Journal of Social Science and Humanity vol. 2, no. 2, pp. 133-138, 2012.