The interaction of environmental factors and individual traits on investors’ perception

Our study extends prior research on the investment decision-making process focusing on investors’ perception. On the basis of the Starbuck and Milliken (1988) model that divides perception into two stages, noticing and sense making, we investigate the driving factors of perception and provide empirical evidence on the interaction between environmental factors and individual traits. We test the empirical predictions of our model with an experiment on a takeover bid. Our results show that: (a) the distinction between noticing and sense making is significant to examine investors’ information processing, since the driving factors and interactions of the two stages are different, (b) a high ambiguity context negatively influences the two phases of investors’ perception; while the individual cognitive profile affects this negative influence on noticing, it does not affect it on sense making, (c) information clarity, without considering other contexts or personality factors, improves noticing but it does not produce significant effects on sense making, (d) the reliability of the source of information only has an effect on noticing and sense making when it interacts with other context variables and the cognitive profile affects this influence, and (e) the most relevant cognitive variable in noticing is ambiguity–tolerance, whereas in sense making it is intuition.