Development of Information Searches in Risky Investment Decision: Testing a Moderating Role of Income

Purchasing risky financial investments has been a means to create individual wealth. Facing uncertainty, investors may assess economic loss, and then seek to achieve expected returns through information search. Most studies focus on digital information and advice-seeking information. This study extends the investigation of information search to discuss heuristics reliance, a simplified information search method. We also examine the moderating effect of income on our extended information search model. 378 investors with investment experiment from financial holding companies were surveyed and the multiple-group structural equation modeling was employed. The findings show that individuals with more risk aversion tend to seek more information. More advice-seeking information search and heuristics reliance through a mass of digital information can increase investor interest in mutual fund investments. We find significant support for income differences in individual information searches in investment decision-making. Thus, the practical implications for professional advisors or governments could be addressed.