Andreas Hüsser (email@example.com) is a PhD Student and Werner Wirth (firstname.lastname@example.org) is a Full Professor of Empirical Research, both at the Institute of Mass Communication and Media Research, University of Zurich, Switzerland. This publication was made possible by the “Forschungskredit” of the University of Zurich, Grant no. 56260602.
Gravitation Toward Prior Performance in Mutual Fund Advertisings: Do Consumer Investors' Processing Abilities Account for Biased Information Processing?
Article first published online: 11 APR 2013
Copyright 2013 by The American Council on Consumer Interests
Journal of Consumer Affairs
Volume 47, Issue 2, pages 219–242, Summer 2013
How to Cite
HÜSSER, A. and WIRTH, W. (2013), Gravitation Toward Prior Performance in Mutual Fund Advertisings: Do Consumer Investors' Processing Abilities Account for Biased Information Processing?. Journal of Consumer Affairs, 47: 219–242. doi: 10.1111/joca.12007
- Issue published online: 16 JUL 2013
- Article first published online: 11 APR 2013
- Manuscript Accepted: 7 FEB 2013
- Manuscript Revised: 19 DEC 2012
- Manuscript Received: 29 AUG 2012
This study examines the cognitive processes involved in consumer investors' information processing of mutual fund characteristics. We tested whether consumer investors' limited processing abilities account for biased return perceptions, as reported in the literature. Consumer investors' processing abilities were manipulated by varying the duration of information exposure time to a mutual fund advertisement. Experimental results suggest that a longer time spent by consumer investors learning about mutual fund characteristics resulted in reduced reliance on prior fund performance as a heuristic cue, which in turn resulted in an unbiased processing of mutual fund characteristics. In contrast, when consumer investors spent less time learning about mutual fund characteristics, prior fund performance significantly affected subsequent return expectations and argument persuasiveness of the mutual fund advertisement. These findings suggest that disclaimers warning that past performance does not guarantee future results are ineffective when consumer investors have limited attention and lower processing abilities.