How mutual fund investors’ objective and subjective knowledge impacts their information search and processing behaviour

Abstract

Contrary to the popular belief that objective knowledge (OK) (that is, what is actually stored in the memory) and subjective knowledge (SK) (that is, what individuals perceive they know) differently impact information search and information-processing behaviour, an empirical study conducted on 268 mutual fund (MF) investors suggests no significant difference in the impact of OK and SK on the width and depth of information search and information processing. The study suggests that OK and SK significantly positively impact the width and depth of information search and information-processing behaviour, however, no significant difference exists in the way they impact. The possible explanation put forward is that even though MF investors may suffer from self-deception (that is, pseudo expertise) and report high knowledge (that is, high SK), the impact of SK on actual investment behaviour is not significantly different from that of OK. The implications of the findings are also discussed.