Consumers’ use of information intermediaries and the impact on their information search behavior in the financial market

An information intermediary is a human or a nonhuman party designed to assist consumers in information processing. The current study identifies factors determining the likelihood of using human information intermediaries and the effects of using information intermediaries on the amount and the pattern of overall information search. The proposed model is built based on a value-intention framework and tested in the context of financial investment decisions. The results indicate that a low level of perceived expertise in financial management, a large amount of total financial assets, and a high opportunity cost of time enhance the perceived value of information intermediaries, thus increasing the likelihood of using information intermediaries. We also find that the use of information intermediaries is positively associated with the overall extent of information search and influences the likelihood of using other information sources. ********** Today's consumers are bombarded by information. Advances in technology have made the production, retrieval, and distribution of information much easier, faster, and cheaper than ever before (Johnson 2001). The explosion of information has shifted many decision-making situations from being information scarce (so that having more information is an advantage) to being information saturated (thus creating a great need to filter it out), which Shenk (1997) refers to as "data smog. " This situation has generated the problem of information overload for many consumers (Gifford 2001). Even if consumers are not intimidated by vast amounts of information, they still need to decide how to distribute their limited attention across a variety of information sources. In this process, it is often necessary for consumers to allocate their cognitive capacity to processing irrelevant, unclear, and inaccurate data in order to find the needed information. The oversupply of information thus adds more stresses and burdens to consumers' information processing, frequently causing psychological anxiety and tension, reduced attention span, difficulties in memorizing and remembering, and poor decision making (Waddington 2003). Consumer educators and policy makers have increasingly recognized the problems caused by information overload and have identified enhancing information literacy (i.e., consumers' ability to identify, locate, understand, evaluate, and use information effectively to solve a given problem) as one of the goals for restructuring public education (Brock 1994; Caissey 1990). Information overload is also a problem for businesses since data smog makes it harder to draw the attention of potential customers and to encode messages in their memories (Varian 1998). It becomes vital for many businesses to attract consumers' attention and encourage them to make decisions based on the information provided by one's firm (Ariely 2000; Gifford 2001; MacKie-Mason and Varian 1996). Offering information intermediaries has been suggested as one way to help consumers cope with problems caused by information overload. The term "information intermediary" refers to a human or a nonhuman party designed to assist consumers in information processing. Rose (1999), in particular, defines it as an economic agent supporting the production, exchange, and use of information in order to increase the value of the information for its end user or to reduce the cost of information acquisition. Examples of information intermediaries can include various types of search engines on the Internet, librarians, travel agents, insurance agents, financial advisors, and many others whose role is to reduce the time and effort consumers spend on information acquisition and processing. Consumers' reliance on information intermediaries for their decision making has been increasingly noticeable in recent years (Rappa 2003). Despite the important role information intermediaries plays in the current information-drenched decision environment, little attention has been paid to understanding consumers' use of information intermediaries, particularly those involving direct human interactions. …