How does subjective knowledge affect choice

Knowledge is essential to making a wise choice, but there is more than one kind of knowledge. Research supports a distinction between objective knowledge (OK) and subjective knowledge (SK), each having their own particular antecedents and impact on behaviours related to search and choice.

The 'Subjective knowledge and consumer choice' (SUBJECTIVE KNOWLEDGE) project highlighted a lack of research documenting the specific impact that SK has on judgment and choice processes. The initiative sought to address this hitherto unbalanced focus.

In a first set of four studies, the team explored the role of SK versus OK in the context of financial choice. Based on the results, SUBJECTIVE KNOWLEDGE proposed that consumer education programmes, usually aimed at enhancing OK, should more deliberately emphasise consumers' confidence in their knowledge.

A second set of studies investigated how SK impacts decisions related to the size of choice sets (small or large). Results indicate that people with low SK in a particular area have greater intention to buy when presented with more choice options, while the opposite holds for people with high SK. As such, when marketers and policymakers deliberate on the number of options to be offered, they should consider how knowledgeable consumers feel regarding the product category or domain.

The third set of studies offers important insight into the effects of consumer experience on preferred pricing strategies. Results show that consumers are more likely to favour a retailer that offers small discounts often (frequency). The findings thus add value to research on optimal pricing strategies.

A last set of studies shows that, when called on to choose a product, low SK consumers employ problem-solving techniques that favour compromise options, dominating options and deferring choice.

Other project activities included international research collaboration, undergraduate- and graduate-level teaching, and thesis supervision. The project and its results have been communicated through papers published in leading peer-reviewed journals and presentations at national and international.

Overall, SUBJECTIVE KNOWLEDGE successfully highlighted the unique influence of SK on financial choice as well as retailer choice. The project thus set a basis for enhanced design of consumer financial education programmes, choice sets and pricing patterns. Related improvements will better account for decision makers' needs and preferences.