Reconciliation of Expectancy-Valence and Expectation- Disconfirmation Paradigms in Investment Decisions: Case of Turkish Equity Investors

Abstract

Human expectations are believed to play a key role in setting the direction of actual behavior. Although having its influence in a number of sectors and product types, the concept of expectations deserves special attention in the financial investment decisions, which is mostly up to the prospective beliefs about the major economic indicators and interrelationship among them. There exist numerous paradigms covering the concept with varying antecedents and consequences with a lacking coherence. Besides, the existing literature tends to take a finance-viewpoint in covering the investment decisions rather than a consumer behavior stance. The aim of this study is to demonstrate that the process of the first arousal of human need into the actual behavior might be analyzed in a coherent combination of Expectancy-Valence and Expectation-Disconfirmation Theories. The suggested approach is applied in the area of financial services, specifically in the determination of the motivational force to invest in the Turkey Equity Market by the Turkish investors. The findings indicate that the investors’ motivational force is a function of the sum of expectations for the expected outcome and their valences. Their motivational force has an impact on their state of disconfirmation and its direction which, in turn influences their state of satisfaction. Past experience also emerges both as an outcome of the satisfaction process and as an antecedent of the motivational force for the following investment decision, in the periods covered.