Menu
Home
Log in / Register
 
Home arrow Business & Finance arrow Chronic Regulatory Focus and Financial Decision-Making
< Prev   CONTENTS   Next >

7.3 Future Directions

From a theoretical standpoint, this book has shown that chronic regulatory focus may not always be the system that drives one's financial decision-making. This book hopes to encourage more research in finance, involving regulatory focus theory. As this work is of an exploratory nature, much of the results herein are more directions for future research rather than conclusions on their own. This section will briefly summarise the key findings that can pioneer future research.

The adverse world financial outlook is proposed to have influenced the partic- ipants, causing them to select assets and portfolios not in accordance to their regulatory foci. It appears that the poor world financial climate is far greater an influence than one's chronic regulatory focus. The exact mechanism of the effect requires further study. Most of the participants selected the more conservative, prevention-associated assets on the self-report, postulated to be due to the effect of the negative financial outlook. To the best of the researcher's knowledge, there has been no research on how the average consumer shifts their investment patterns when the economic climate worsens. Such research can be of use to financial institutions, to aid in their marketing processes during unfavourable economic times.

Previous research does not explore how participants can be influenced by such exogenous factors, such as a poor economic climate. Future studies can explore how major world events influence participants to make decisions that are not in accordance with their chronic regulatory focus. For example, those who have experienced a natural disaster, may be influenced to make decisions that are pre- vention associated, irrespective of their original chronic regulatory focus. Such research may be useful in tailoring policy decisions for those affected in such a way. On the self-report, females who were prevention-focused were more likely to select the prevention asset, and females who were promotion-focused were more likely to select the promotion portfolio. Previous research indicates no association between gender and regulatory focus. It may be that for financial decision-making, gender is related to regulatory focus. Further study can be conducted in this area, to determine if regulatory focus is contingent on gender, in the context of financial decision-making.

The majority of the academics who participated in the experiment had a chronic promotion focus, which was linked to previous studies on the motivations of the former. Further study can be done to confirm whether certain occupations predicate the necessity for a certain regulatory foci. This will aid firms in their hiring and career planning processes, better matching applicants to occupations most suited to their regulatory foci.

Those who had a chronic prevention focus, and a positive outlook still selected the prevention asset on the self-report. However, this book had very few partici- pants reporting a positive financial outlook, given the harsh economic climate. Future study can be done on a far greater scale, so as to recruit a large number of participants with a positive outlook. The aim of such a study would be to research the relative strength of the prevention system, over the promotion system. If financial institutions are able to determine the chronic regulatory focus of their participants before marketing financial products, detailed information on both systems would aid in specifically tailoring products to cater for such individuals.

The data indicates that the eye tracking selections do not significantly match the selections indicated on the self-report. It was proposed that the eye tracker selec- tions may give insights into the type of information viewed by consumers but does not provide clear indication of whether this information was used to make an associated financial decision on the self-report. As the eye tracker cannot determine one's actual thought process, more advanced devices should be used in tandem, such as the EEG and fMRI, and a similar experiment conducted. At present, there are limited studies involving the EEG/fMRI and financial decision-making (Knutson and Bossaerts 2007; Kuhnen and Knutson 2005), and future studies in this area would give insight into how individuals make financial decisions.

On the self-report, most of the participants who selected the promotion asset also selected the promotion portfolio, and most of those who selected the prevention asset also selected the prevention portfolio. This indicates that the portfolios pro- vided for this experiment are reflective of states of promotion and prevention. Further study can empirically test whether participants select promotion or pre- vention portfolios after having been primed for a promotion or prevention condi- tion. Such research will aid financial institutions, and enable them to cater to their customer's regulatory foci when marketing financial products.

The individuals taking part in this research are presumably made more aware of how they choose various financial products, and their inherent biases, if any. Participants, from knowing their own chronic regulatory focus, may put more thought into selecting financial products, regardless of the world financial situation. For policy makers, it may be possible for future financial literacy frameworks to take into account one's chronic regulatory focus, catering more effectively to individual needs. The next section provides the conclusion for this book, high- lighting the key findings observed.

 
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
 
Subjects
Accounting
Business & Finance
Communication
Computer Science
Economics
Education
Engineering
Environment
Geography
Health
History
Language & Literature
Law
Management
Marketing
Philosophy
Political science
Psychology
Religion
Sociology
Travel