News at Smith

Self-View, Goals and Choices

Jan 01, 2006


Research by Rebecca Hamilton, Gabriel J. Biehal

In their paper "Achieving Your Goals or Protecting Their Future? The Effects of Self-View on Goals and Choices," Rebecca Hamilton, assistant professor of marketing, and Gabriel J. Biehal, associate professor of marketing, examined how consumers’ self-views and goals affected their choices of investments through two experiments conducted online and in the Smith School’s Netcentric Behavioral Research Lab. These studies were made possible by a summer research grant from the Smith School.

For the first experiment, Hamilton and Biehal constructed a set of four ads designed to evoke different goals among participants. Two ads were designed to activate an independent self-view by encouraging consumers to consider their own goals, and two ads were designed to activate an interdependent self-view by encouraging consumers to consider their responsibility to others.

After viewing one of the ads, participants were given a hypothetical budget of $5,000 to allocate among four mutual funds. Results of the experiment show that inferred risk preferences differ depending on whether consumers think of themselves as independent or interdependent. Consumers who saw themselves as independent of others focused on promotion goals—achieving financial gains—and had a higher tolerance for risk. Consumers who saw themselves as interdependent and connected with others focused on prevention goals—preventing financial losses—and were more averse to risk.

A second experiment, conducted in the Smith School’s Netcentric Behavioral Research Lab, examined the way a consumer’s self-view and already-existing portfolio of investments affect his or her choice of a new investment. First, consumers were encouraged to adopt either an independent or interdependent self-view, next they were given a hypothetical portfolio of either high-risk or low-risk investments, and then they were asked to choose a new investment.

Hamilton and Biehal found that the make-up of a consumer’s initial portfolio affected their investment choices differently depending on the consumer’s selfview. While those with an independent self-view still chose riskier investments than those with an interdependent self-view, those with an interdependent selfview made riskier investment choices if their initial portfolio was high in risk. This indicates that the desire of consumers with an interdependent self-view to maintain the status quo was greater than their desire to avoid financial losses. Hamilton and Biehal’s work is the first to demonstrate this indirect effect of selfview on consumer’s desire to maintain the status quo, relating the individual’s current investment portfolio to their future choices.

Is it possible to change consumer’s risk preferences? Hamilton’s and Biehal’s research indicates that an advertisement crafted to encourage consumers to think in an independent or interdependent way can influence consumers’ choices. “Our studies used MBAs and undergraduate business students—subjects who have had classes in marketing. The average consumer is probably less aware of being influenced by marketing messages and may be even more likely to have their risk preferences shifted by the marketing messages of financial firms,” says Hamilton.

Though it is possible for firms to shift consumers’ risk preferences—and thus sell more of a certain type of investment vehicle—it may not be wise. The researchers caution that consumers who are influenced by temporary factors into making an investment decision that is not consistent with their long-term goals may not be happy with the investment company in the long run.

There is a potential for economic ramifications when the marketing messages of many individual companies shift the risk preferences of large numbers of consumers in one direction or another. “There are hundreds of billions of dollars invested each year,” says Biehal. “Even a relatively small effect can have a huge implications for the industry.”

Hamilton and Biehal recommend that consumers take steps to ameliorate the effects of marketing messages on their own financial decision-making. Using several sources of information about investments and investment firms and taking some time before making any investment decisions makes it less likely that situational factors will unduly influence a consumer’s decision-making process. The complete paper based on this research was published in the Journal of Consumer Research in September 2005. For more information, contact

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The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, online MBA, specialty master's, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.

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