Can Perceptions of Property Market Volatility and Optimism Be Affected by Message Framing and Market...

Can Perceptions of Property Market Volatility and Optimism Be Affected by

Message Framing and Market Familiarity?

Deborah Levy and Catherine Frethey-Bentham, The University of Auckland Business School, Auckland, New Zealand

Changha Jin, Hanyang University, Korea

ERES 2013: Vienna University of Technology4 July, 2013

• Introduction and Literature Review

• Methodology• Analysis and Results• Summary

Outline

Introduction and Literature Review

Introduction• Extant literature notes that the perceptions of

individuals are influenced by context or message framing

• A frame can be regarded as some combination of the beliefs, values, attitudes and mental models that people adopt to apprehend and comprehend a situation

• The frame significantly affects how individuals infer meaning and hence understand a situation

Introduction

• Literature also identifies differences in judgements between decision makers within familiar and unfamiliar markets

• This study combines these two phenomena to see if media effects differ when decisions are being made by decision makers within familiar and unfamiliar markets

Literature Review

Media Effects• Price, Tewkesbury & Powers (1997), Pruitt, Reilly &

Hoffer (1988), Soroka (2006) identified media effects

Property Related• Huge & Hoffman (2008) found a relationship between

the amount and type of media coverage and public perceptions in the context of the housing market

• Jin & Gallimore (2010) confirmed that positive and negative framing can act to alter people’s market perceptions of the same market scenario

• Case & Shiller (2003) confirmed the existence of media effects and the term ‘bubble’

Literature Review

Positive vs Negative Effects

• Levin (1987), Levin & Gaeth (1988)

• Maheswaran & Meyers-Levy (1990)

Literature Review

Familiar and Unfamiliar markets• Diaz & Hansz, 1997 - experts operating in

geographically unfamiliar markets were influenced by anonymous expert opinions

• Diaz & Hansz (2001) - suggests that market uncertainty as reflected by geographical unfamiliarity has a role in triggering reference point anchoring

• Diaz Gallimore & Levy (2004) - while valuers perhaps ought to increase sales search in unfamiliar markets, this research revealed no evidence that they do so

Methodology

Study One: Novices• 181 participants drawn

from students completing a Bachelor of Property Degree at the University of Auckland, New Zealand

• All students had completed 1-17 property courses

• All students had at least 6 hours practical experience

• Experiment was carried out under the supervision of 5 researchers at lecture theatres to ensure minimum distraction and bias

Samples

Study Two: Experts• 46 participants who were

registered valuers

• The respondents were employees from seven companies in the Auckland area

• Experiment was carried out under the supervision of 2 researchers inside a room at the company premises to ensure minimum distraction and bias

Data Collection

• All respondents were asked to read a fictitious news article reporting on the reporting of “a prestigious consortium of economic forecasters”

• Each treatment group was provided with a description of the Auckland (high familiarity) or Atlanta (low familiarity) market framed either positively or negatively and were instructed to answer a number of questions relating to their perceptions of the market

Examples of Positive and Negative Framing

Positive Framing Negative Framing

HeadingGood news for Auckland [Atlanta]: prestigious forecasting group anticipates recovery is only one year out.

HeadingBad news for Auckland [Atlanta]: prestigious forecasting group anticipates recovery at least one year out.

IntroductionA prestigious consortium of economic forecasters with their fingers on the pulse of the global economy sees good times just ahead for New Zealand’s [the US’s] number one commercial property market.

IntroductionA prestigious consortium of economic forecasters with their fingers on the pulse of the global economy sees a prolonged recovery for New Zealand’s [the US’s] number one commercial property market.

Within textA majority of EFC’s forecasters anticipate that the Auckland [Atlanta] commercial property market will stabilise in as little as a year.

Within textA majority of EFC’s forecasters anticipate that the Auckland [Atlanta] commercial property market will not stabilise for another full year.

The independent variables that were manipulated in this experiment were:1. Market Familiarity – familiar property market (Auckland) or

unfamiliar market (Atlanta) 2. Message Framing – positive or negative

A 2 x 2 between subjects design was implemented to investigate differences between treatment groups

Experimental Design

Sample Sizes

Novices (Students)Market Familiarity

TotalFamiliar (Auckland)

Unfamiliar (Atlanta)

FramingPositive 36 50 86

Negative 46 49 95

Total 82 99 181

Experts (Valuers)Market Familiarity

TotalFamiliar (Auckland)

Unfamiliar (Atlanta)

FramingPositive 11 11 22

Negative 12 12 24

Total 23 23 46

Outcome MeasuresThe impact of Framing and Market Familiarity on a number of dependent (outcome) variables was investigated, these being:

Outcome Measure

Positive Outcome Measures

Positive Feelings

Buyer Optimism

Perceptions of an Expected Rebound in the Commercial Property Market

Negative Outcome Measures

Perceptions of Greater Volatility in the Commercial Property Market

Buyer Pessimism

Belief that there is a Declining Commercial Property Market

Analysis and Results

Study One: Novices• A 2 (Familiarity – Unfamiliar/

Familiar) x 2 (Framing – Negative/ Positive) between subjects design

• Analysis of Variance (ANOVA) used to investigate the impact of the Framing and Market Familiarity

• A separate ANOVA was conducted for each of the dependent variables

Analysis

Study Two: Experts• Small sample sizes in each

group meant non-parametric tests were required

• To investigate differences between positive and negative framing groups• Mann-Whitney U tests

• To investigate differences for both framing and market familiarity:• Kruskal Wallis tests• Graphical exploration /

descriptive statistics

• Separate analyses for each of the dependent variables

Hypotheses

• Hypotheses were formulated for each dependent variable

• For each dependent variable, hypotheses were formulated for the main effect of framing on the dependent variable AND the interaction effect between framing and expertise

• The hypothesis being that the impact of message framing is moderated by level of expertise

Positive Outcome Measures: Positive Feelings

Novices Experts

H2: The impact of framing on positive feelings in the short term will be moderated by market familiarity

H1: Negative (positive) framing of the same information will decrease (increase) positive feelings in the short term in the relevant commercial property market

+ve +ve

-ve-ve




Novices Experts




H1: Supported at 5% LevelH2: Supported at 5% Level

H1: Not Supported at 5% LevelH2: Not Supported at 5% Level

Novices Experts

Positive Outcome Measures: Buyer Optimism

H4: The impact of framing on buyer optimism will be moderated by market familiarity

H3: Negative (positive) framing of the same information will decrease (increase) buyer optimism in the relevant commercial property market

+ve +ve

-ve-ve

Novices Experts




Novices Experts

Positive Outcome Measures: Perceptions of an Expected Rebound

H6: The impact of framing on perceptions of an expected rebound will be moderated by market familiarity

H5: Negative (positive) framing of the same information will decrease (increase) perceptions of an expected rebound in the relevant commercial property market

+ve

+ve-ve-ve

Novices Experts




Novices Experts




H5: Supported at 5% LevelH6: Not Supported at 5% Level


Novices Experts

Negative Outcome Measures: Buyer Pessimism

H8: The impact of framing on buyer pessimism will be moderated by market familiarity

H7: Negative (positive) framing of the same information will increase (decrease) buyer pessimism in the relevant commercial property market

+ve+ve-ve

-ve

Novices Experts




Novices Experts

Negative Outcome Measures: Perceptions of a Declining Market

H10: The impact of framing on perceptions of a declining commercial property market will be moderated by market familiarity

H9: Negative (positive) framing of the same information will increase (decrease) perceptions that there is potential for a declining commercial property market

+ve

+ve-ve

-ve

Novices Experts




Novices Experts




H9: Supported at 10% LevelH10: Not Supported at 5% Level


Novices Experts

Negative Outcome Measures: Perceptions of Greater Volatility

H12: The impact of framing on perceptions of greater volatility will be moderated by market familiarity

H11: Negative (positive) framing of the same information will increase (decrease) perceptions of greater volatility in the relevant commercial property market

+ve

+ve

-ve

-ve

Novices Experts




Novices Experts

Summary

Summary: Main Effects (Framing)

Outcome Variable

Students[Positive – Negative]

Valuers[Positive – Negative]

Sample Mean

DifferenceSig.

Sample Mean

DifferenceSig.

Positive Outcomes

H1 Positive feelings +0.8 ** +0.4

H3 Buyer optimism +0.8 ** +0.4

H5 Expected rebound +0.6 ** +0.4

Negative Outcomes

H7 Buyer pessimism -0.1 -0.1

H9 Declining market -0.4 * -0.3

H11 Greater volatility -0.4 ** -0.4

Summary: Interaction Effects (Framing and Market Familiarity)

Outcome VariableStudents

[Positive – Negative]

Valuers[Positive – Negative]

Sample Mean

DifferenceSig.

Sample Mean Difference

Sig.

Positive Outcomes

H2

Familiar: Positive feelings 0.3 +0.6 Unfamiliar: Positive feelings 1.3 ** +0.2

H4

Familiar: Buyer optimism 0.2 +0.9 Unfamiliar: Buyer optimism 1.1 ** -0.1

H6

Familiar: Expected rebound 0.5 +0.3 Unfamiliar: Expected rebound 0.6 +0.5

Negative Outcomes

H8

Familiar: Buyer pessimism -0.3 -0.3 Unfamiliar: Buyer pessimism -0.1 +0.1

H10

Familiar: Declining market -0.4 -0.7 Unfamiliar: Declining market -0.3 +0.1

H12

Familiar: Greater volatility -0.5 * -0.3 Unfamiliar: Greater volatility -1.3 ** -0.6

Summary

• With regard to message framing …– Experts (Valuers) appear to use heuristics more in

unfamiliar markets– Novices (Students) tend to use heuristics more in

familiar markets

• Why???

Questions

Can Perceptions of Property Market Volatility and Optimism Be Affected by Message Framing and Market...

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