Research Idea: Consumer Financial Decision Making
With the evolving business landscape, and a recession currently in play, there is an increased interest in how consumers make financial decisions regarding their savings and retirement, stock selection and investments, credit cards, and mortgages.
Recent research on the issue has found that individuals often do not behave according to the rationality assumptions of the existing standard finance literature. Instead, they tend to exhibit a range of behavioural and psychological motivations for their actions. For example, individual investors tend to trade too much and under-diversify, driven by motives related to entertainment, familiarity and speculation. On the other hand, consumers use mental accounting to try and save for retirement or their children’s’ college education while paying their day-to-day bills.
Knowing what underlies and drives consumers' financial decision-making is important, as there is an increasing self-responsibility for building up and managing retirement wealth in recent years. There is a clear societal relevance to knowing how consumers in reality make their financial decisions, whether this is in their best (financial) interest, and if and how policy makers should and/or could help them to make “better” choices.
There is room for further research in this area to help to develop smart defaults and inform consumers on how to better deal with important financial choices related to retirement saving, credit card usage, consumer credit, loans and investing.
If this area of research is on interest to you, you may consider undertaking an Honours project on this topic.
Your research could combine data analytics, literature reviews, or interview and social media analysis, to explore the motivators and drivers behind financial consumer decision making.
Research interest area: services marketing, consumer behaviour, behavioural economics, choice architecture, consumer financial decision making.