Advertisement

The role of cognitive style, gullibility, and demographics on the use of social media for financial decision making

  • Jenna Florendo
  • Hooman EstelamiEmail author
Original Article

Abstract

Consumer use of social media has witnessed significant growth in recent years. Due to its unregulated, user-generated, and poorly censored format, social media use has blurred the line between the fake and the true and can result in mass dissemination of inaccurate and false information, thereby impacting national politics, election outcomes, and social interactions between consumer social clusters. In the unique context of financial decisions, consumer reliance on social media can significantly increase the risk of making poor financial decisions. This study examined the impact of cognitive style, consumer gullibility, and demographics on consumers’ reliance on social media for financial decision making. The results of a US national survey identify consumer characteristics which contribute to increased reliance on social media in financial decision making. The findings point to consumer vulnerabilities associated with psychographic and demographic attributes of consumers. The paper concludes with recommendation-related consumer education and public protection measures.

Keywords

Social media Information processing Financial decision making 

Notes

References

  1. Allinson, C.W., and J. Hayes. 2012. The Cognitive Style Index: Technical Manual and User Guide. New York: Pearson.Google Scholar
  2. Allinson, C.W., and J. Hayes. 1996a. The Implications of Learning Styles for Training and Development: A Discussion of the Matching Hypothesis. British Journal of Management 6: 63–73.Google Scholar
  3. Allinson, C.W., and J. Hayes. 1996b. The Cognitive Style Index: A Measure of Intuition-Analysis for Organizational Research. Journal of Management Studies 33(1): 119–135.Google Scholar
  4. Alsubagh, Helal. 2015. The Impact of Social Networks on Consumers’ Behaviors. International Journal of Business and Social Science 6(1): 209–216.Google Scholar
  5. Anderson, Bryan. 2018. Influence of Education, Income and Age on Newspaper Use and Platform Preference. Elon Journal of Undergraduate Research in Communications 9(1): 108–114.Google Scholar
  6. Armstrong, S.J., C.W. Allinson, and J. Hayes. 1997. The Implications of Cognitive Style for the Management of Student-Supervisor Relationships. Educational Psychology 17(1): 209–217.Google Scholar
  7. Bagozzi, Richard P., and Gordon R. Foxall. 1996. Construct Validation of a Measure of Adaptive-Innovative Cognitive Styles in Consumption. International Journal of Research in Marketing 13(3): 201–213.Google Scholar
  8. Barber, Brad M., and Terrance Odean. 2001. Boys will be Boys: Gender, Overconfidence, and Common Stock Investment. The Quarterly Journal of Economics 116(1): 261–292.Google Scholar
  9. Barbosa, S.D., M.W. Gerhardt, and J.R. Kickul. 2007. The Role of Cognitive Style and Risk Preference on Entrepreneurial Self-Efficacy And Entrepreneurial Intentions. Journal of Leadership and Organizational Studies 13(4): 86–104.Google Scholar
  10. Betz, N.E., and G. Hackett. 1996. Applications of Self-Efficacy Theory to Understanding Career Choice Behavior. Journal of Social and Clinical Psychology 4(3): 279–289.Google Scholar
  11. Byrnes, J.P., D.C. Miller, and W.D. Schafer. 1999. Gender Differences in Risk-Taking: A Meta-Analysis. Psychological Bulletin 125(3): 367–383.Google Scholar
  12. DataReportal. 2019. Global Social Network Penetration Rate. https://www.statista.com/statistics/269615/social-network-penetration-by-region/.
  13. Dafonte-Gómez, A. 2018. Audience as Medium: Motivations and Emotions in News Sharing. International Journal of Communication 12(2018): 2133–2152.Google Scholar
  14. Dijksterhuis, A. 2004. Think Different: The Merits of Unconscious Thought in Preference Development and Decision Making. Journal of Personality and Social Psychology 87(5): 586–598.Google Scholar
  15. Dootson, Paula, Amanda Beatson, and Judy Drennan. 2016. Financial Institutions Using Social Media: Do Consumers Perceive Value? International Journal of Bank Marketing 34(1): 9–26.Google Scholar
  16. Enders, Megan Lee, Sanjib K. Chowdhury, and Intakhab Alam. 2008. Gender Effects on Bias in Complex Financial Decisions. Journal of Managerial Issues 20(2): 238–254.Google Scholar
  17. Estelami, Hooman. 2009. Cognitive Drivers of Sub-rational Financial Decisions: Implications for Financial Literacy Campaigns. Journal of Financial Services Marketing 14(4): 273–283.Google Scholar
  18. Farshid, Mana, Kirk Plangger, and Nel Deon. 2011. The Social Media Faces of Major Global Financial Service Brands. Journal of Financial Services Marketing 16(3–4): 220–229.Google Scholar
  19. Fogel, Joshua, and Elham Nehmad. 2008. Internet Social Network Communities: Risk Taking, Trust, and Privacy Concerns. Computers in Human Behavior 25(1): 153–160.Google Scholar
  20. Guo, Tao, Michael Finke, and Barry Mulholland. 2015. Investor Attention and Advisor Social Media Interaction. Applied Economics Letters 22(4): 261–273.Google Scholar
  21. Greenspan, Stephen. 2008. Annals of Gullibility: Why We Get Duped and How to Avoid It. Santa Barbara: Pareger.Google Scholar
  22. Hair, J.F., W.C. Black, B. Babin, and R. Anderson. 2007. Multivariate Data Analysis. New York: Pearson.Google Scholar
  23. Halpern, D.E. 1992. Sex Differences in Cognitive Abilities. 2nd ed. Hillsdale: Lawrence-Erlbaum.Google Scholar
  24. Harrington, Kent. 2017. Social Media Fake News Inflaming the Gullibility of Ill-Informed Voters. The Australian. November 9, 2017.Google Scholar
  25. Hayes, Jameson, and Geoffrey Graybeal. 2011. Synergizing Traditional Media and the Social Web for Monetization: A Modified Media Micropayment Model. Journal of Media Business Studies 8(2): 19–44.Google Scholar
  26. Heinonen, Kristina. 2011. Consumer Activity in Social Media: Managerial Approaches to Consumers’ Social Media Behavior. Journal of Consumer Behaviour 10(6): 356–367.Google Scholar
  27. Junco, Reynol, Dan Merson, and Daniel W. Salter. 2010. The Effect of Gender, Ethnicity, and Income on College Students’ Use of Communication Technologies. Cyberpsychology, Behavior, and Social Networking 13(6): 619–627.Google Scholar
  28. Kim, Angella J., and Eunju Ko. 2012. Do Social Media Marketing Activities Enhance Customer Equity? An Empirical Study of Luxury Fashion Brand. Journal of Business Research 65(2012): 1480–1486.Google Scholar
  29. Klein, J. 1999. The Relationship between Level of Academic Education and Reversible and Irreversible Processes of Probability Decision-Making. Higher Education 37(4): 323–339.Google Scholar
  30. Kogan, Shimon, Tobias J. Moskowitz, and Marina Niessner. 2018. Fake News in Financial Markets. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3237763.
  31. Kristoffer, Holt, Adam Shehata, Jesper Strömbäck, and Elisabet Ljungberg. 2013. Age and The Effects of News Media Attention and Social Media Use on Political Interest and Participation: Do Social Media Function as Leveller? European Journal of Communication 28: 19–34.Google Scholar
  32. Kümpel, Anna S., Veronika Karnowski, and Till Keyling. 2015. News Sharing in Social Media: A Review of Current Research on News Sharing Users, Content, and Networks. Social Media + Society 1(2): 1–14.Google Scholar
  33. Lehman, D.R., R.O. Lempert, and R.E. Nisbett. 1988. The Effects of Graduate Training on Reasoning: Formal Discipline and Thinking About Everyday-Life Problems. American Psychologist 43: 431–442.Google Scholar
  34. Lehman, D.R., and R.E. Nisbett. 1990. A Longitudinal Study of the Effects of Undergraduate Training on Reasoning. Developmental Psychology 26: 952–960.Google Scholar
  35. Martin, Lorna P. 1998. The Cognitive-Style Inventory, Vol. 8, vol. 2. St. Louis: The Pfeiffer Library.Google Scholar
  36. McCroskey, James C., and Jason J. Teven. 1999. Goodwill: A Reexamination of the Construct and its Measurement. Communication Monographs 66(1): 90–103.Google Scholar
  37. Murray, Lisa, Mark Durkin, Steve Worthington, and Victoria Clark. 2014. On the Potential for Twitter to Add Value in Retail Ban Relationships. Journal of Financial Services Marketing 19(4): 277–290.Google Scholar
  38. Olsen, Robert A., and Constance M. Cox. 2001. The Influence of Gender on the Perception and Response to Investment Risk: The Case of Professional Investors. Journal of Psychology and Financial Markets 2(1): 29–36.Google Scholar
  39. Rossini, Patrícia, Jeff Hemsley, Sikana Tanupabrungsun, Feifei Zhang, and Jennifer Stromer-Galley. 2018. Social Media, Opinion Polls, and the Use of Persuasive Messages During the 2016 US Election Primaries. Social Media and Society July–September 2018: 1–11.Google Scholar
  40. Rothschild, Phillip C. 2011. Social Media Use in Sports and Entertainment Venues. International Journal of Event and Festival Management 2(2): 139–150.Google Scholar
  41. Shao, Guosong. 2009. Understanding the Appeal of User-Generated Media: A Uses and Gratification Perspective. Internet Research 19(1): 7–25.Google Scholar
  42. Smith, M. 1999. Gender, Cognitive Style, Personality and Management Decision Making. Management Accounting 77: 7–8.Google Scholar
  43. Social Media Fact Sheet. 2018. Pew Research Center. http://www.pewinternet.org/factsheet/social-media/.
  44. Sternberg, R.J., and E.L. Grigorenko. 1997. Are Cognitive Styles Still in Style? American Psychologist 52(4): 700–712.Google Scholar
  45. Stier, Sebastian, Arnim Bleier, Haiko Lietz, and Markus Strohmaier. 2018. Election Campaigning on Social Media: Politicians, Audiences, and the Mediation of Political Communication on Facebook and Twitter. Political Communication 35(1): 50–74.Google Scholar
  46. Tilley, Patti, Joey George, and Kent Marett. 2004. Deception Detection under Varying Electronic Media and Warning Conditions. In Proceedings of the Hawaii International Conference on System Sciences, pp. 24b–24b.Google Scholar
  47. United States Census Bureau. 2017. 2013–2017 American Community Survey 5-Year Estimates. https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF.
  48. Voorveld, Hilde A.M., Guda van Noort, Daniël G. Muntinga, and Fred Bronner. 2018. Engagement with Social Media and Social Media Advertising: The Differentiating Role of Platform Type. Journal of Advertising 47(1): 38–54.Google Scholar
  49. Webb, Thomas, Judith Joseph, Lucy Yardley, and Susan Michie. 2010. Using the Internet to Promote Health Behavior Change: A Systematic Review and Meta-Analysis of the Impact of Theoretical Basis, Use of Behavior Change Techniques, and Mode of Delivery on Efficacy. Journal of Medical Internet Research. 12(1): e4.Google Scholar
  50. White, J.C., P.R. Varadarajan, and Peter A. Dacin. 2003. Market Situation Interpretation and Response: The Role of Cognitive Style, Organizational Culture, and Information Use. Journal of Marketing 67(3): 63–79.Google Scholar
  51. Williams, Christine B. 2017. Introduction: Social Media, Political Marketing and the 2016 U.S. Election. Journal of Political Marketing 16(3–4): 207–211.Google Scholar
  52. Yamagishi, Toshio, Masako Kikuchi, and Motoko Kosugi. 1999. Trust, Gullibility, and Social Intelligence. Asian Journal of Social Psychology 2: 145–161.Google Scholar
  53. Zhu, Rui, Utpal M. Dholakia, Xinlei Chen, and René Algesheimer. 2012. Does Online Community Participation Foster Risky Financial Behaviour? Journal of Marketing Research 49(3): 394–407.Google Scholar

Copyright information

© Springer Nature Limited 2019

Authors and Affiliations

  1. 1.Gabelli School of BusinessFordham UniversityBronxUSA
  2. 2.Gabelli School of BusinessFordham UniversityWest HarrisonUSA

Personalised recommendations