Decision-Making Practices of Retail Investors between Self-Expertising and Helplessness

Project management:
Prof. Dr. Uwe Schimank
Project assistance:
Dr. Michael Walter, Lydia Welbers, M.A.
Project term: March 1, 2015 – February 28, 2018

Retail investors have become an important group of actors on global financial markets. However, little is known about their experiences in the financial market, and how they make their investment decisions. In our sociological research project we use qualitative methods of empirical research in order to investigate into the following questions:

  • Why does someone become a retail investor? Is there a particular pressure to invest money on the financial market as a compensation for insufficient pensions?
  • How does someone experience his or her situation on the financial market? In which ways do retail investors attempt to become experts? Do feelings of helplessness arise when they are confronted with the »hypercomplexity« of the decisions they have to make?
  • Which practices of decision-making do retail investors use? How and to what extent do these practices reduce uncertainty inherent to the financial market’s »hypercomplexity«?

The empirical basis to answer these research questions will be about 80 problem-centred interviews with retail investors in Germany (about 65 interviews) and in Great Britain (about 15 interviews) as well as observations of group discussions in 3 investment clubs. We will compare retail investors who just want to take a chance to earn some additional money on the one hand with those who feel a need to earn additional money in order to secure their future living standard on the other hand. Furthermore, we will compare rather passive retail investors with more active ones. The main result of this project will be a differentiated typology of retail investors with regard to their decision-making practices, including social, cultural, and biographical circumstances that generate those particular practices.

Based on methods of qualitative social research, our project aims to provide a profound and differentiated body of knowledge about financial market careers of retail investors, their motives, orientations, decision practices and financial literacy. This body of knowledge may be applied in policy making concerning retail investor’s possibilities of action including, for example, regulatory protection for retail investors and efforts to improve their financial literacy.

Gefördert vom Bundesministerium für Bildung und Forschung
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