Past Imperfect or Present Perfect? How Dynamic Ranks Influence Consumer Perceptions

Abstract

While ranked lists are ubiquitous, research on how consumers interpret changes in the rank of an entity is limited. Across seven studies (including a study with web data and a Google AdWords field experiment), this investigation shows that consumers reward a rise in rank and penalize a decline in rank, and that psychological momentum associated with the rank change information underlies these effects. Further, rewarding a rise and penalizing a fall are moderated by consumers’ perception of the reason for the rank change, the nature of the entity, and the nature of the ranked list. The impact of changing rank is attenuated when the rank change is attributed to other entities on the list, when entities are considered nonmalleable, or when the list is updated more frequently. The investigation also identifies a specific case in which consumers do not extrapolate the direction of a change in rank into the future. In addition to contributing to theory, this research provides actionable insights and demonstrates practical ways in which managers can communicate dynamic ranks to enhance the benefit of an improvement in rank or attenuate the penalty from a decline.