The Formation of Market-Level Expectations and Its Covariates

Eugene W Anderson and Linda Court Salisbury

Journal of Consumer Research, 2003, vol. 30, issue 1, 115-24

Abstract: A formal model of market-level expectations is developed and used to identify testable hypotheses. The empirical findings indicate that market-level expectations are more adaptive in nature than previously thought. The study also provides the first systematic investigation of cross-industry variation in the formation of market-level expectations. Several factors, including advertising, word-of-mouth, market growth, and purchase frequency, are found to have a significant moderating influence on the adaptation rate. Finally, we find that market-level expectations adjust faster when perceived quality declines, suggesting that negativity biases manifest at a macrolevel--a phenomenon that has not been previously observed. Copyright 2003 by the University of Chicago.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jconrs:v:30:y:2003:i:1:p:115-24

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