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Chapter 6 General Discussion

Abstract

This chapter commences with a discussion of the key findings, the validity of the hypotheses and insights from the eye tracking analysis. This is followed by a discussion of the other relevant findings in the experiment.

6.1 Key Findings

6.1.1 Main Hypotheses

Tests of association between one's asset selection decisions and their regulatory focus did not provide any significant results (H1). Neither the self-report nor the eye tracker measure yielded significant results in this aspect. As such, H1 is unsup- ported, and it is concluded that chronic promotion and prevention-focused partic- ipants do not choose promotion and prevention-based assets respectively. On the eye tracker and self-report, participants were more likely to select the prevention asset, regardless of their regulatory focus. It is postulated that this is due to the effect of the unfavourable world financial outlook, causing participants to choose assets that are not associated with chronic regulatory foci.

Concerning H2, tests of association between one's portfolio selection decisions and their regulatory focus did not yield any significant results. Neither the self-report nor the eye tracker measure yielded significant results in this aspect. Thus, H2 is unsupported, and it is concluded that promotion and prevention- focused participants do not choose promotion and prevention-based portfolios respectively. On the self-report, participants were almost equally likely to choose either portfolio, and tended to choose the prevention portfolio on the eye tracker, regardless of their chronic regulatory foci. This was purported to be due to the effect of the harsh world financial outlook, causing participants to choose portfolios that do not match their chronic regulatory foci.

It may be argued that participants were more likely to select the prevention-based assets on the eye tracker and self-report and the prevention portfolio on the eye tracker because of the high proportion of Asians, possibly culturally biased to being more risk averse. However, as stated in Sect. 4.3.1.2, participants would be made aware of various modes of thought by virtue of studying at a highly ranked cos- mopolitan university, negating the effects of inherent risk preferences.

Research states that when hypotheses are unsupported, it may be due to imprecise research (Grant 1962) and that if statistically significant results are obtained, only then it is certain that the experiment was done properly (Festinger 1953; Wilson and Miller 1964). However, such a viewpoint disregards useful insights that may arise from unsupported hypotheses. Guidelines have been set for acceptance of the unsupported hypotheses; testing many subjects, controlling for variance, having sensitive measurements and avoiding floor and ceiling effects (Frick 1995). Though most of these criteria require subjective judgments (Frick 1995), this book addresses the issues successfully.

Simply put, the attempt to demonstrate a statistically significant effect, but fail, is

the only way to give credence to an unsupported hypothesis (Frick 1995). In this book, the researcher set out to validate the hypotheses, but was unable to do so, and thus proposed an alternative explanation. The next section provides some expla- nation for the unsupported main hypotheses.

6.1.1.1 Financial Outlook

Past studies indicate that placing a warning concerning faked responses, before personality tests, can result in decreased average scores (Dwight and Donovan 2003). In addition, instruction sets and other similar manipulations can alter per- sonality tests (Nordlund and Snell 2006). These influences, whilst subtle, have strong effects concerning a variety of outcomes (Nordlund 2009). Most relevant to this study, is that such effects can modify behaviour, such as making one more polite or rude (Bargh et al. 1996), even facilitating new characteristics (DeMarree et al. 2005). It is also known that environmental factors non-associated with experiment results can influence outcomes (Matthey 2010).

Thus, it is proposed that the effect of the adverse world financial climate acted as

an external, uncontrollable influence, causing most participants to select assets and portfolios that were not in accordance with their regulatory foci. Given that the unfavourable world financial outlook constantly surrounds the participant, its effect may be far longer and salient than effects induced in controlled experimental set- tings. This effect is proposed to be similar to external primes, which are peripheral and guide one to certain sections of information (Morris 2012). Thus, the external effect of the financial crisis has possibly acted as an external influence, overcoming the effect of respondent's chronic regulatory focus.

This is unsurprising as after the 1987 crash, for example, many investors were still nervous about the market, even after the recovery (Butterworth 1989). It has been noted that a decline in stock prices leads to a decline in consumer confidence, even with households that did not own stock (Garner 1988), which may explain why the majority of participants selected the prevention asset. Investors' behaviour is affected by social movements (Shiller et al. 1984), and thus if the majority is of the opinion that the economy is poor, most people would tend to err on the side of caution and look to less risky, prevention-associated assets. After the recent crisis, individual behaviour is altered, influenced by the environment. Consumers buy cheaper goods and eat out less (Gärling et al. 2009; Association for Psychological Science 2010) and experience reductions in spending behaviour even years after (Naghi et al. 2015). Some also choose to reallocate financial assets (Essner and Rosenius 2012). Overall, there exists much literature on how firms react in hard times (Bloom et al. 2001, 2007; Carruth et al. 2000), but there have been minimal studies on how the average consumer behaves in a poor economic climate (Gärling et al. 2009).

At present, seminal studies in priming (Bargh et al. 1996; Dijksterhuis and Van Knippenberg 1998) are facing controversy, as recent studies have failed to replicate findings (Doyen et al. 2012; Pashler et al. 2012; Shanks et al. 2013; Yong 2012). Although methods have been proposed to remedy the situation (Kahneman 2012), the antecedents for the lack of replicability have not been considered. It may be that stronger, more immersive effects, such as the harsh world financial climate may outplay the effects of priming in controlled experimental conditions. The effect of such external effects may be the cause of the lack of replicability of various priming studies. This research postulates that when inducing primes in experiments related to financial decision-making, the researcher must take into account the effects of events such as financial crises. These black swan (Taleb 2010) events are likely to have an effect on the results, regardless of any primes induced within the experi- ment. In the context of this study, it is put forward that the effect of the poor financial environment overrode the participants' chronic regulatory focus. Whilst regulatory focus may guide how one pursues goals, it appears that the financial climate has a far greater influence on one's decisions. The next section explores the additional hypotheses put forth.

 
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