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

1
Can Perceptions of Property Market Volatility and
Optimism Be Affected by Message Framing and
Market Familiarity?
ERES 2013 Vienna University of Technology 4
July, 2013 

• Deborah Levy and Catherine Frethey-Bentham, The
  University of Auckland Business School, Auckland,
  New Zealand
• Changha Jin, Hanyang University, Korea

2
Outline

• Introduction and Literature Review
• Methodology
• Analysis and Results
• Summary

3
Introduction and Literature Review
4
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

5
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

6
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 peoples
  market perceptions of the same market scenario
• Case Shiller (2003) confirmed the existence of
  media effects and the term bubble

7
Literature Review

• Positive vs Negative Effects
• Levin (1987), Levin Gaeth (1988)
• Maheswaran Meyers-Levy (1990)

8
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

9
Methodology
10
Samples

• 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

• 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

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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

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Examples of Positive and Negative Framing
Positive Framing Negative Framing
Heading Good news for Auckland Atlanta prestigious forecasting group anticipates recovery is only one year out. Heading Bad news for Auckland Atlanta prestigious forecasting group anticipates recovery at least one year out.
Introduction A prestigious consortium of economic forecasters with their fingers on the pulse of the global economy sees good times just ahead for New Zealands the USs number one commercial property market. Introduction A prestigious consortium of economic forecasters with their fingers on the pulse of the global economy sees a prolonged recovery for New Zealands the USs number one commercial property market.
Within text A majority of EFCs forecasters anticipate that the Auckland Atlanta commercial property market will stabilise in as little as a year. Within text A majority of EFCs forecasters anticipate that the Auckland Atlanta commercial property market will not stabilise for another full year.
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Experimental Design

• The independent variables that were manipulated
  in this experiment were
• Market Familiarity familiar property market
  (Auckland) or unfamiliar market (Atlanta)
• Message Framing positive or negative
• A 2 x 2 between subjects design was implemented
  to investigate differences between treatment
  groups

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Sample Sizes
Novices (Students) Novices (Students) Market Familiarity Market Familiarity Total
Novices (Students) Novices (Students) Familiar (Auckland) Unfamiliar (Atlanta) Total
Framing Positive 36 50 86
Framing Negative 46 49 95
Total Total 82 99 181
Experts (Valuers) Experts (Valuers) Market Familiarity Market Familiarity Total
Experts (Valuers) Experts (Valuers) Familiar (Auckland) Unfamiliar (Atlanta) Total
Framing Positive 11 11 22
Framing Negative 12 12 24
Total Total 23 23 46
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Outcome Measures

• The impact of Framing and Market Familiarity on a
  number of dependent (outcome) variables was
  investigated, these being

Outcome Measure
Positive Outcome Measures Positive Feelings
Positive Outcome Measures Buyer Optimism
Positive Outcome Measures Perceptions of an Expected Rebound in the Commercial Property Market
Negative Outcome Measures Perceptions of Greater Volatility in the Commercial Property Market
Negative Outcome Measures Buyer Pessimism
Negative Outcome Measures Belief that there is a Declining Commercial Property Market
16
Analysis and Results
17
Analysis

• 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

• 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

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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

19
Positive Outcome Measures Positive Feelings
Experts
Novices
ve
ve
-ve
-ve
H1 Negative (positive) framing of the same
information will decrease (increase) positive
feelings in the short term in the relevant
commercial property market
H2 The impact of framing on positive feelings
in the short term will be moderated by market
familiarity
20
Positive Outcome Measures Positive Feelings
Experts
Novices
H1 Negative (positive) framing of the same
information will decrease (increase) positive
feelings in the short term in the relevant
commercial property market
H2 The impact of framing on positive feelings
in the short term will be moderated by market
familiarity
21
Positive Outcome Measures Positive Feelings
Experts
Novices
H1 Supported at 5 Level H2 Supported
at 5 Level
H1 Not Supported at 5 Level H2 Not
Supported at 5 Level
H1 Negative (positive) framing of the same
information will decrease (increase) positive
feelings in the short term in the relevant
commercial property market
H2 The impact of framing on positive feelings
in the short term will be moderated by market
familiarity
22
Positive Outcome Measures Buyer Optimism
Experts
Novices
ve
ve
-ve
-ve
H3 Negative (positive) framing of the same
information will decrease (increase) buyer
optimism in the relevant commercial property
market
H4 The impact of framing on buyer optimism will
be moderated by market familiarity
23
Positive Outcome Measures Buyer Optimism
Experts
Novices
H3 Negative (positive) framing of the same
information will decrease (increase) buyer
optimism in the relevant commercial property
market
H4 The impact of framing on buyer optimism will
be moderated by market familiarity
24
Positive Outcome Measures Buyer Optimism
Experts
Novices
H3 Supported at 5 Level H4 Supported
at 5 Level
H3 Not Supported at 5 Level H4 Not
Supported at 5 Level
H3 Negative (positive) framing of the same
information will decrease (increase) buyer
optimism in the relevant commercial property
market
H4 The impact of framing on buyer optimism will
be moderated by market familiarity
25
Positive Outcome Measures Perceptions of an
Expected Rebound
Experts
Novices
ve

ve
-ve
-ve
H5 Negative (positive) framing of the same
information will decrease (increase) perceptions
of an expected rebound in the relevant commercial
property market
H6 The impact of framing on perceptions of an
expected rebound will be moderated by market
familiarity
26
Positive Outcome Measures Perceptions of an
Expected Rebound
Experts
Novices

H5 Negative (positive) framing of the same
information will decrease (increase) perceptions
of an expected rebound in the relevant commercial
property market
H6 The impact of framing on perceptions of an
expected rebound will be moderated by market
familiarity
27
Positive Outcome Measures Perceptions of an
Expected Rebound
Experts
Novices
H5 Supported at 5 Level H6 Not
Supported at 5 Level
H5 Not Supported at 5 Level H6 Not
Supported at 5 Level

H5 Negative (positive) framing of the same
information will decrease (increase) perceptions
of an expected rebound in the relevant commercial
property market
H6 The impact of framing on perceptions of an
expected rebound will be moderated by market
familiarity
28
Negative Outcome Measures Buyer Pessimism
Experts
Novices
-ve
ve
-ve
ve

H7 Negative (positive) framing of the same
information will increase (decrease) buyer
pessimism in the relevant commercial property
market
H8 The impact of framing on buyer pessimism
will be moderated by market familiarity
29
Negative Outcome Measures Buyer Pessimism
Experts
Novices

H7 Negative (positive) framing of the same
information will increase (decrease) buyer
pessimism in the relevant commercial property
market
H8 The impact of framing on buyer pessimism
will be moderated by market familiarity
30
Negative Outcome Measures Buyer Pessimism
Experts
Novices
H7 Not Supported at 5 Level H8 Not
Supported at 5 Level
H7 Not Supported at 5 Level H8 Not
Supported at 5 Level

H7 Negative (positive) framing of the same
information will increase (decrease) buyer
pessimism in the relevant commercial property
market
H8 The impact of framing on buyer pessimism
will be moderated by market familiarity
31
Negative Outcome Measures Perceptions of a
Declining Market
Experts
Novices
-ve
ve
-ve

ve
H9 Negative (positive) framing of the same
information will increase (decrease) perceptions
that there is potential for a declining
commercial property market
H10 The impact of framing on perceptions of a
declining commercial property market will be
moderated by market familiarity
32
Negative Outcome Measures Perceptions of a
Declining Market
Experts
Novices
H9 Negative (positive) framing of the same
information will increase (decrease) perceptions
that there is potential for a declining
commercial property market
H10 The impact of framing on perceptions of a
declining commercial property market will be
moderated by market familiarity
33
Negative Outcome Measures Perceptions of a
Declining Market
Experts
Novices
H9 Supported at 10 Level H10 Not
Supported at 5 Level
H9 Not Supported at 5 Level H10 Not
Supported at 5 Level

H9 Negative (positive) framing of the same
information will increase (decrease) perceptions
that there is potential for a declining
commercial property market
H10 The impact of framing on perceptions of a
declining commercial property market will be
moderated by market familiarity
34
Negative Outcome Measures Perceptions of Greater
Volatility
Experts
Novices
-ve

ve
-ve
ve
H11 Negative (positive) framing of the same
information will increase (decrease) perceptions
of greater volatility in the relevant commercial
property market
H12 The impact of framing on perceptions of
greater volatility will be moderated by market
familiarity
35
Negative Outcome Measures Perceptions of Greater
Volatility
Experts
Novices

H11 Negative (positive) framing of the same
information will increase (decrease) perceptions
of greater volatility in the relevant commercial
property market
H12 The impact of framing on perceptions of
greater volatility will be moderated by market
familiarity
36
Negative Outcome Measures Perceptions of Greater
Volatility
Experts
Novices
H11 Supported at 5 Level H12 Supported
at 5 Level
H11 Not Supported at 5 Level H12 Not
Supported at 5 Level

H11 Negative (positive) framing of the same
information will increase (decrease) perceptions
of greater volatility in the relevant commercial
property market
H12 The impact of framing on perceptions of
greater volatility will be moderated by market
familiarity
37
Summary
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Summary Main Effects (Framing)
Outcome Variable Outcome Variable Students Positive Negative Students Positive Negative Valuers Positive Negative Valuers Positive Negative
    Sample Mean Difference Sig. Sample Mean Difference Sig.
Positive Outcomes Positive Outcomes Positive Outcomes Positive Outcomes Positive Outcomes 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 Negative Outcomes Negative Outcomes Negative Outcomes Negative Outcomes Negative Outcomes
H7 Buyer pessimism -0.1 ? -0.1 ?
H9 Declining market -0.4 -0.3 ?
H11 Greater volatility -0.4 -0.4 ?
39
Summary Interaction Effects (Framing and Market
Familiarity)
Outcome Variable Outcome Variable Students Positive Negative Students Positive Negative Valuers Positive Negative Valuers Positive Negative
        Sample Mean Difference Sig. Sample Mean Difference Sig.
Positive Outcomes Positive Outcomes Positive Outcomes Positive Outcomes Positive Outcomes Positive Outcomes
H2 Familiar Positive feelings 0.3 ? 0.6 ?
H2 Unfamiliar Positive feelings 1.3 0.2 ?
H4 Familiar Buyer optimism 0.2 ? 0.9 ?
H4 Unfamiliar Buyer optimism 1.1 -0.1 ?
H6 Familiar Expected rebound 0.5 ? 0.3 ?
H6 Unfamiliar Expected rebound 0.6 ? 0.5 ?
Negative Outcomes Negative Outcomes Negative Outcomes Negative Outcomes Negative Outcomes Negative Outcomes
H8 Familiar Buyer pessimism -0.3 ? -0.3 ?
H8 Unfamiliar Buyer pessimism -0.1 ? 0.1 ?
H10 Familiar Declining market -0.4 ? -0.7 ?
H10 Unfamiliar Declining market -0.3 ? 0.1 ?
H12 Familiar Greater volatility -0.5 -0.3 ?
H12 Unfamiliar Greater volatility -1.3 -0.6 ?
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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???

41
Questions
42
Hypotheses
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Hypotheses Positive Outcome Measures
Hypothesis
H1 Negative (positive) framing of the same information will decrease (increase) positive feelings in the short term in the relevant commercial property market
H2 The impact of framing on positive feelings in the short term 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
H4 The impact of framing on buyer optimism 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
H6 The impact of framing on perceptions of an expected rebound will be moderated by market familiarity
44
Hypotheses Positive Negative Measures
Hypothesis
H7 Negative (positive) framing of the same information will increase (decrease) buyer pessimism in the relevant commercial property market
H8 The impact of framing on buyer pessimism 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 in the relevant commercial property market
H10 The impact of framing on perceptions of a declining commercial property market 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
H12 The impact of framing on perceptions of greater volatility will be moderated by market familiarity