The current research explores the influence of implicit self-theories on decisions involving financial risk. Building from research on self-signaling, we explore how loss salience impacts the relationship between an individual’s self-theory and financial risk choice. We show that entity theorists are less risk-seeking under conditions in which a possible monetary loss is more salient (i.e. presented less ambiguously, Studies 1a and 1b). We demonstrate a reversal of this effect by showing that entity theorists are more risk-seeking when a possible loss is less salient (i.e. presented more ambiguously, Studies 2a and 2b). Study 3 introduces tolerance of ambiguity as a mediating factor in the relationship between implicit self-theory and financial risk-taking, such that entity theorists are more tolerant of ambiguity, leading them to accept more risk under conditions where loss is ambiguous. We conclude with discussion for self-theory research, transformative services research, managerial decision-making, and consumer well-being.

Introduction

The importance of making sound financial decisions in securing long-term economic well-being is rarely disputed, as establishing healthy saving and investing habits can move one closer to achieving financial security and stability (Winterich & Nenkov, 2015). Imperative in this process is financial risk, as the amount of risk one is willing to accept affects one’s ability to appropriately invest for the future (Nuttall & Jahnke, 2000). Thus, it is not surprising that the process by which consumers make decisions involving financial risk has received increased emphasis from scholars, policy makers, and practitioners, as over half of US consumers rate their financial situation as either “poor” or “fair” (Gallup, 2014) and 60% of households have less than $25,000 in total savings and investments (Greene & Monga, 2013). Accordingly, there is a need to better understand the link between one’s personal traits and the risk-related decisions that ultimately impact financial well-being (Brüggen, Hogreve, Holmlund, Kabadayi, & Löfgren, 2017). The current research addresses this call by exploring the role of implicit self-theories in the acceptance of financial risk.