An Examination of Consumer Financial Decision Making in Interpersonal Contexts.

Abstract

The past five years have witnessed a surge of interdisciplinary research aimed at understanding and improving consumer financial decision making. Scholars in this area attempt to enhance consumer welfare by uncovering and altering situational and contextual factors that drive individuals to make financially suboptimal decisions. Naturally, most research in this nascent field has focused on how individuals approach financial decisions. However, financial decisions are often subject to social influence and are made within the context of existing relationships (e.g., between spouses). Moreover, the outcomes of such decisions can be important determinants of relationship satisfaction. Thus, my dissertation provides a more complete understanding of consumer financial decision making by examining how financial decisions influence the development of relationships (Essay 1) and how relationship dynamics influence financial decisions (Essay 2). I find that others’ chronic spending habits shape the inferences we draw about them (e.g., their perceived general self-control), which ultimately influences initial romantic and physical attraction. I also find that couples make more optimal debt repayment decisions working together than individual couple members working on their own. Unlike stranger-pairs who lack information about each other’s relative strengths and weaknesses, established couples benefit from placing greater weight on the preferences of the partner with greater financial expertise. Theoretical implications and future directions are discussed.