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Does Online Community Participation Foster Risky Financial Behavior?

47 Pages Posted: 14 Sep 2011  

Rui Zhu

Rice University

Utpal M. Dholakia

Rice University - Jesse H. Jones Graduate School of Business

Xinlei Chen

University of British Columbia (UBC) - Sauder School of Business

René Algesheimer

University of Zurich

Date Written: September 12, 2011

Abstract

Although consumers increasingly use online communities for various activities, little is known regarding how participation in them affects individuals’ decision making strategies. Through a series of field and laboratory studies, we demonstrate that participation in an online community increases risk seeking tendency of individuals in financial decisions and behaviors. Our results reveal that participation in an online community leads consumers to perceive support from other members, that is they believe they will be helped by other community members should difficulties arise. Such a perception leads online community members to make riskier financial decisions than non-participants. We also discover a boundary condition to the effect: online community members are more risk seeking only when they have relatively strong ties with other members; when ties are weak, they exhibit similar risk preferences as non-members.

Keywords: Online Community Participation, Risk Preferences, Risky Financial Behavior

Suggested Citation

Zhu, Rui and Dholakia, Utpal M. and Chen, Xinlei and Algesheimer, René, Does Online Community Participation Foster Risky Financial Behavior? (September 12, 2011). Available at SSRN: https://ssrn.com/abstract=1926478 or http://dx.doi.org/10.2139/ssrn.1926478

Rui Zhu

Rice University ( email )

6100 South Main Street
Houston, TX 7705-1892
United States

Utpal M. Dholakia (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

Xinlei Chen

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

René Algesheimer

University of Zurich ( email )

Department of Business Administration
Andreasstrasse 15
Zurich, 8050
Switzerland

HOME PAGE: http://www.market-research.uzh.ch

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