The Effects of Consumer Risk Perception on Pre-purchase Information in Online Auctions: Brand, Word-of-Mouth, and Customized Information

Abstract

This study examines how consumer information processing affects consumers' perception of risk prior to purchase. In particular, this research focuses on pre-purchase information such as brand, word-of-mouth, and customized information. The results show that customized information and word-of-mouth communication influence consumers more than do other types of information from online auctions. Consumers rely on these two factors because they are based on consumer experience and relevant to product purchase. Nevertheless, brand also has a significant effect upon consumer perceived risk. Pre-purchase information processing is directly related to reducing consumers' risk perception. In particular, information processing associated with product performance plays a crucial role in reducing consumers' perceived risk in online transactions. The results offer insights to e-marketers and e-marketing researchers about the role of pre-purchase information in management and e-commerce.