The Impact of Past Performance on Information Valuation in Virtual Communities

Abstract

Individuals may seek and read others' opinions or may want to interact with others after participating in virtual communities. Information, opinions, and advice in virtual communities may drive individuals to make decisions. However, the value of information may vary from person to person. Individuals with different perceptions and experiences may differently evaluate the same information. Our study thus investigates how individuals process others' opinions on stock message boards for their investment decisions when they have different levels of investment returns. The actual gain/loss of wealth may influence investors' information processing behaviors. The behavioral finance literature argues that self-attribution bias influences an investor's learning process. The self-attribution bias suggests that investors who use others' opinions for their decisions may lower the usefulness of opinions when losing money but increase opinions' investment-related abilities when making a profit from investments. In the context of online stock message boards, we investigate the influence of information valuation in virtual communities and start with an exploration of how they attribute their success or failure to either themselves or other investors on stock message boards. Unlike other studies of continuous intention to use a virtual community, we consider the two paths using the factors of the online stock message board itself and individual factors for continuous intention to use the online stock message board. Thus, our research is related to the information system literature and the finance literature.