The Consumer’s Perceived Risk When Buying a Home: The Role of Subjective Knowledge, Perceived Benefits of Information Search and Information Search Behavior

Having knowledge of various aspects of the consumer’s buying process can help companies significantly when developing strategies to increase their market share, while relying on two mechanisms: enhancing customer satisfaction and/or reducing the customer’s perceived risk. This study aims to develop and empirically test a conceptual model of consumers’ perceived risk for a prefabricated house purchase. The study has two specific objectives: (a) to determine the influence of prior subjective knowledge on an individual’s risk perception, and (b) to test the mediating effect of the perceived benefits of information search between perceived risk and information search behavior. According to the empirical findings, prior subjective knowledge and perceived benefits of information search are significantly and directly related to perceived risk. Information search behavior is only indirectly influenced by perceived risk through perceived benefits of information search. In addition to the empirical research, implications are set out for several stakeholders: manufacturers and sellers of prefabricated houses, and companies producing strategically important products.