The market dynamics of collective ignorance and spiraling risk
Informazioni aggiuntive
Autori
Pellandini-Simányi L.,
Barnhart M.
Tipo
Articolo pubblicato in rivista scientifica
Anno
2024
Lingua
Inglese
Sommario
In some markets, offerings become riskier over time as producers introduce new versions that are made more affordable by increasing their risk. Existing theories suggest consumers adopt riskier versions either because they become more risk tolerant or they trade higher risk for lower price—both of which presume consumers know the risks. We reveal a third explanation: evolving market dynamics that increasingly encourage consumer inattention to risk and produce “collective ignorance.” We identify factors of collective inattention and propose a three-stage model of development of collective ignorance by analyzing the case of risk buildup in the Hungarian mortgage market. Data include archival materials and interviews with borrowers, lenders, and regulators. Initially, producers offer low-risk products, and social, cultural, and institutional factors encourage attention to risk. Consumers attentive to and capable of assessing risk become early adopters. Over time, increasing adoption and changes in market factors divert consumers’ attention from risk, shifting it to price. Under insufficient regulation, risk escalates: producers repeatedly cut price by offering increasingly risky products, while rising collective ignorance leads even risk-averse consumers to adopt them. We offer theoretical contributions to research on the social construction of risk, the attitude–behavior gap, and neoliberal responsibilization.
Parole chiave
Social construction of risk, Personal finance, Regulatory failure, Risk competition, Market system dynamics
Periodico
Journal of consumer research
Volume
51
Numero ( Mese )
4
Pagine (o numero dell’articolo)
698-718
Diffusione
Licenza
CC BY
Visibilità
Pubblico
Status open access
Hybrid
