HERD BEHAVIOR AND INFORMATION ADOPTION BY THE INSURANCE BUYERS: EVIDENCE FROM AN EMERGING ECONOMY

Abstract

Most of the literature on insurance buying behavior explains the phenomenon by considering the traditional determinants of risk and return. This paper aims to investigate the role of reviews by insurance policyholders in influencing others to adopt a specific life insurance policy. Data from 271 insurance buyers were collected using a questionnaire specifically developed for this study. The questionnaire was developed using recognized scales. The information adoption by the insurance buyers has been explained through the theoretical lens of the information adoption model and herding. The proposed model was estimated using Structural Equation Modelling Technique. The results indicated that the information usefulness mediates the effects of argument quality and source credibility on information adoption by the insurance buyers. The results also showed that herding mediates the impact of source credibility on information adoption but attitude homophily and background homophily have no role in mobilizing information adoption. This study has implications for academicians and insurance policymakers. This study is the first of its kind that investigates insurance adoption from the perspective of central and peripheral routes of information processing path and herding. It also contributes by examining the mediating role of information usefulness and herding in explaining the process of insurance adoption.