The main characteristics of services may greatly increase the degree of perceived risk in the purchase of services by decreasing the certainty with which purchases can be made. Therefore the theory of perceived risk plays a greater role in explaining the behavior of buyers of services than the behavior of buyers of goods.
Utility function is an important component of normative decision analysis, in that they characterize the nature of people's risk-taking attitude. And in the previous studies, a measure of risk attitude is based on an individual's von Neumann-Morgestern Utility function.
The purpose of this paper is to illustrate to segment customers by the degree of their risk aversion or risk seeking attitudes and to identify different marketing responses among segments in the financial market. The main findings are (1) people's risk-attitude differs across pay off domains; strong risk-aversion for gain and mixed domain; risk-seeking for symmetric loss domain. (2) people have a individual's acceptable level of risk; for assets below the level, a large majority of individuals appear to be risk-seeking; for assets above the level, a large majority appear to be risk-averse. (3) stable segment is focused on some products reflecting their acceptable level of risk properly; unstable segment is dispersed to various kinds of products according to the level of risk. (4) risk averters respond strongly to the information of pay-off probability, whereas risk proners respond to the information of expected pay-off amounts strongly.
This paper shows how the study of customer segmentation based on risk attitude in the financial market can be used to redirect the firm's resource and to get useful customer responses.
