Market Beliefs Research Articles

Role of Gender in Shaping Consumer Responses to Doctor Influencer: Insights into Brand Perceptions and Repurchase Intentions in the Indonesian Mineral Water Industry

This study investigates the effectiveness of influencer marketing, focusing on Dr. Reisa's endorsement of Le Minerale mineral water in Indonesia. It examines how influencer attributes, such as physical attractiveness, familiarity, expertise, success appeal, and congruency, influence consumer attitudes and repurchase intentions. This study examined the impact of influencer marketing on brand perception and consumer behavior, particularly in the digital era. It challenges traditional marketing theories by analyzing the role of various influencer attributes in shaping consumer attitudes. The primary aim of this study is to assess the unique effects of influencer characteristics on brand attitudes and repurchase intentions, with a special focus on the role of gender as a moderating variable in influencer marketing. This study utilized a survey-based approach to evaluate the impact of influencer attributes—physical attractiveness, familiarity, expertise, success appeal, and congruency on consumer attitudes and repurchase intentions toward Le Minerale’s mineral water. Targeting consumers familiar with Dr. Reisa's endorsement, the survey collects quantitative data to analyze how these attributes, along with gender as a moderating variable, influence brand perception in the digital marketing context. This study reveals that Dr. Reisa's physical attractiveness does not significantly impact brand attitudes, challenging traditional marketing beliefs. However, gender has emerged as a key moderator influencing how attractiveness affects brand perception. Contrary to expectations, familiarity with the influencer has no significant effect on brand attitudes, suggesting a shift in digital audience engagement. Notably, expertise, success appeal, and congruency significantly influence brand attitudes, with gender enhancing the impact of congruency. These insights offer a new perspective on influencer marketing, emphasizing the importance of expertise, success appeal, congruency, and gender considerations, thereby providing marketers with strategic guidance in the digital landscape.

When and Why Antiegalitarianism Affects Resistance to Supporting Black-Owned Businesses

Understanding how initiatives to support Black-owned businesses are received, and why, has important social and economic implications. To address this, we designed three experiments to investigate the role of antiegalitarian versus egalitarian ideologies among White American adults. In Study 1 (N = 199), antiegalitarianism (vs. egalitarianism) predicted viewing initiatives supporting a Black-owned business as less fair, but only when the business was competing with other (presumably White-owned) businesses. In Study 2 (N = 801), antiegalitarianism predicted applying survival-of-the-fittest market beliefs, particularly to Black-owned businesses. Antiegalitarianism also predicted viewing initiatives supporting Black-owned businesses as less fair than initiatives that targeted other (presumably White-owned) businesses, especially for tangible (vs. symbolic) support that directly impacts the success of a business. In Study 3 (N = 590), antiegalitarianism predicted rejecting a program investing in Black-owned businesses. These insights demonstrate how antiegalitarian ideology can have the effect of maintaining race-based inequality, hindering programs designed to reduce that inequality.

Holding diverse market beliefs by firms: Information flow, profit performances, and channel structure

We investigate the impact of diverse market beliefs held by supply chain firms on information flow and channel efficiency. In presentative settings, suppliers sell substitutable products through retailers to a market with uncertain demand and market competition is in quantity. Structure B comprises a monopolistic supplier and a monopolistic retailer. With respect to structure B, structure U includes competition between suppliers, structure D includes competition between retailers, while structure SC includes competition between two supply chains. A retailer has access to a demand signal useful for updating the forecast of market uncertainty. A supplier has no signal access but can offer a payment to a retailer, who decides whether to accept the payment and disclose signal to the supplier, termed information sharing. Suppliers and retailers hold diverse beliefs about market conditions. Knowing each other's market beliefs influences firms’ ex-post operations policies and ex-ante profit perception. We demonstrate that holding diverse beliefs about market uncertainty by firms facilitates information sharing except in the presence of only retailer competition, in which case it deters information sharing. Exchanging market beliefs about market uncertainty among firms strengthens their incentive to engage in information sharing, but it exerts mixed effects on their actual profits. By comparison, suppliers and retailers are more likely to benefit from exchanging market beliefs about market size, although it is inconsequential to information sharing. Moreover, we pinpoint the impacts of holding diverse market beliefs by firms on their relative performances across channel structures.

The role of investor sentiment and market belief in forecasting V-shaped disposition effect: Evidence from a Bayesian learning process with DSSW model

By using the trading data and corporate financial data from 2010 to 2022 in Korean stock market, we combine the Bayesian learning process with the DSSW model to investigate the size and specific manifestations of the disposition effect when market belief is different from investors' irrational beliefs. We find that there is a significant negative correlation between investor sentiment and the investor disposition effect. Moreover, affected by sentiment, the performance of investor disposition effect in the bull market and the bear market is quite opposite. The conclusion of this paper has certain theoretical and practical significance for understanding the disposition effect of investors, optimizing investors' selling decisions, and strengthening the construction of a basic system of the capital market.

Climate actions, market beliefs, and monetary policy

This paper studies the role of expectations and monetary policy in the economy's response to climate actions. We show that in a stochastic environment, without the standard assumption of the perfect rationality of agents, there is more uncertainty regarding the path and the economic impact of a climate policy, with a potential threat to the ability of central banks to maintain price stability. Market beliefs and behavioral agents increase the trade-offs inherent to the chosen mitigation tool, with a carbon tax entailing more emissions uncertainty than in a rational expectations model and a cap-and-trade scheme implying a more pronounced pressure on allowance prices and inflation. The impact on price stability is worsened by delays in the implementation of stringent climate policies, the lack of confidence in the ability of central banks to keep inflation under control, and the adoption of monetary rules tied to expectations rather than current macroeconomic conditions. Central banks can implement successful stabilization policies that reduce the uncertainty surrounding the impact of climate actions and support the greening process while remaining within their mandate.

Firms' diverse market beliefs can facilitate information sharing and improve profit performance

AbstractA supplier sells a product through a retailer to the market with uncertain demand. The retailer has a signal useful for updating the forecast of market uncertainty, while the supplier can offer a payment to acquire the retailer's signal, termed information sharing. Due to differential means of market access and methods of data analysis, the supplier and the retailer hold diverse beliefs about market conditions. A firm is more confident about market conditions as it perceives the market to be less uncertain. The supplier can be either aware or unaware of the retailer's market belief. In the former case, the supplier correctly predicts the retailer's belief‐based response and makes decision accordingly. In the latter case, the supplier infers the retailer's market belief from the retailer's decision about signal disclosure. We unveil the concrete circumstances where the supplier gains access to the retailer's signal, which would not occur when they held the same accurate market belief. Moreover, with the actual profit performance as the measure, the firms can benefit from holding diverse market beliefs, albeit not simultaneously. The supplier's knowledge of the retailer's market belief can facilitate information sharing but can have detrimental effects on the firms' actual profit performance. Given the opportunity, the retailer may report a market belief that is less confident than its real market belief in communicating with the supplier, which can deter information sharing but has intricate effects on the firms' profits.

Recovering Market Beliefs with Ordinal Stochastic Discount Factor Constraints

Recovering Market Beliefs with Ordinal Stochastic Discount Factor Constraints

Preference Reversals Between Digital and Physical Goods

The proliferation of digital goods has led to an increased interest in how the digitization of products and services affects consumer behavior. In this article, the authors show that although consumers are willing to pay more for physical than digital goods, this difference attenuates—and even reverses—when consumers are asked to make a choice between the two product formats. This effect is explained by a contingent weighting principle: In willingness to pay, a quantitative task, consumers anchor on quantitative information (e.g., market beliefs). However, in choice, a qualitative task, consumers anchor on qualitative information (e.g., which good dominates on the most important attribute). These differences in contingent weighting result in physical goods being preferred in willingness to pay, but their digital equivalent being preferred relatively more in choice. The authors draw conclusions from ten preregistered experiments and six supplemental studies using a variety of goods in hypothetical and incentive-compatible contexts, as well as within- and between-subjects designs. The article concludes with a discussion of implications for the marketing of digital goods.

Updating the theory of industrial marketing: Industrial marketing as a Bayesian process of belief-updating

While industrial marketing often comprises a process that, at least in principle, mirrors Bayesian reasoning, the notion of Bayesian inference has predominantly been utilized in the marketing field as a methodological tool. This article suggests that the practice of industrial marketing itself should be (re)conceptualized as a Bayesian process of belief-updating that entails a continuous cognitive cycle of formulation of hypotheses (i.e., beliefs about the market) and the subsequent updating of those hypotheses through exposure to market evidence (e.g., data from the market). A Bayesian perspective on industrial marketing enables a synthesis of a broad body of extant research as well as a focus on the interconnection between executives' market beliefs (theories-in-use) and belief-updating (assessing the validity of those beliefs in view of market evidence). A view of industrial marketing as a Bayesian process not only enhances our understanding in general but also fosters insights into market learning in uncertain and volatile situations. A Bayesian conceptualization suggests a new understanding of industrial marketing that also informs a typology of marketing approaches. We outline opportunities for developing a better understanding of the Bayesian foundation of industrial marketing.

Climate Actions, Market Beliefs and Monetary Policy

Climate Actions, Market Beliefs and Monetary Policy

Project Selection, Information Feedback, and Catering to Market Belief

Project Selection, Information Feedback, and Catering to Market Belief

The lead of oil price rises on US equity market beliefs and preferences

AbstractWe find that oil price rises from a strengthening global economy have a state‐dependent lead on US equity market beliefs and preferences. When equity volatility is low, rising oil prices lead higher cashflow expectations, lower long‐run (LR) volatility, and increased LR risk aversion. When volatility is high, markets focus on the contractionary effects of higher input costs, with rising oil prices leading decreased cashflow expectations, higher LR volatility, and decreased LR risk aversion. Findings suggest important refinements for asset pricing, portfolio choice, and models that link financial markets to the macroeconomy.

Promotions, managerial project choice, and implementation effort

AbstractIn our model where career concerns take the form of promotion, managers use projects and effort to influence the labor market beliefs regarding their ability. We show that managers consider how projects affect the extent to which posterior beliefs can differ from initial beliefs, the precision of posterior beliefs, and equilibrium implementation effort costs. The following results obtain. Although projects differ only in terms of the information they reveal, equilibrium implementation effort costs can reverse project choices. More informative projects can induce lower effort despite the learning effect identified by Holmströmm's paper (1999). Regardless of the attractiveness of promotion, equilibrium effort is insufficient at either end of the reputation distribution. Finally, good (respectively, bad) reputation managers sometimes choose the more informative (respectively, less informative) project.

Going Nativist: How Nativism and Economic Ideology Interact to Shape Beliefs about Global Trade

AbstractExisting research explains variation in trade attitudes by pitting explanations rooted in the foreign part of foreign economic policy, like nativism, against economic beliefs like a commitment to free market principles. But what happens when these factors create significant cross-pressures—how do free market-oriented nativists think about trade? We argue that nativism is a higher-order belief that constrains the relationship between lower-order economic attitudes and beliefs about international trade. We test our argument using representative samples from the United States and United Kingdom. First, we analyze observational data and find a significant interaction whereby nativism moderates the relationship between free market attitudes and beliefs that trade provides national and global benefits. Second, we report results from a survey experiment to show that a message about the long-term benefits from free trade increases support for free trade in both samples. Importantly, we also find that nativist values weaken the treatment effect in the US sample. As long as international relations scholars focus on cultural or economic antecedents on their own, we miss much about how elements in belief systems interact.

Heterogeneity in households’ stock market beliefs: Levels, dynamics, and epistemic uncertainty

We analyse a long panel of households’ stock market beliefs to gain insights into the nature of the levels, dynamics, and informativeness of these expectations. In a first step, we classify respondents into one of five groups based on their beliefs data alone. In a second step, we estimate models of expectations at the group level so that belief levels, volatility, and response to information can vary freely across groups. At opposite extremes in terms of optimism we identify pessimists who expect substantially negative returns and financially sophisticated individuals whose expectations are close to the historical average. Two groups expect average returns around zero and differ only in how they respond to information: Extrapolators who become more optimistic following positive information and mean-reverters for whom the opposite is the case. The final group is characterised by its members being unable or unwilling to quantify their beliefs about future returns.

Belief Movement, Uncertainty Reduction, and Rational Updating

Abstract When a Bayesian learns new information and changes her beliefs, she must on average become concomitantly more certain about the state of the world. Consequently, it is rare for a Bayesian to frequently shift beliefs substantially while remaining relatively uncertain, or, conversely, become very confident with relatively little belief movement. We formalize this intuition by developing specific measures of movement and uncertainty reduction given a Bayesian’s changing beliefs over time, showing that these measures are equal in expectation and creating consequent statistical tests for Bayesianess. We then show connections between these two core concepts and four common psychological biases, suggesting that the test might be particularly good at detecting these biases. We provide support for this conclusion by simulating the performance of our test and other martingale tests. Finally, we apply our test to data sets of individual, algorithmic, and market beliefs.

Climate Actions, Market Beliefs, and Monetary Policy

This paper studies the role of expectations and monetary policy in shaping the response of the economy to climate actions. We show that in a stochastic environment and without the standard assumption of perfect rationality of agents, there is more uncertainty regarding the time-path and the impact of a climate policy on the economy. The state of the economy and market beliefs determine the effectiveness of a mitigation plan implemented through carbon pricing. Climate actions may be frustrated by the presence of agents lacking the cognitive abilities necessary to form rational expectations. Monetary policy may reduce the uncertainty surrounding the impact of climate policies and may support the greening process.

Is Sustainability a Liability? Green Marketing and Consumer Beliefs about Eco-Friendly Products

Is Sustainability a Liability? Green Marketing and Consumer Beliefs about Eco-Friendly Products

Chasing the Beta, Losing the Alpha

In this paper, we tackle the Beta anomaly, namely the fact that high-Beta assets tend to be associated with lower risk-adjusted returns than low-Beta assets, and connect it to mutual funds' expectations. We present a model with two types of investors, mutual funds and hedge funds, with heterogeneous market expectations and margin constraints. We show that the Beta anomaly is especially present for stocks purchased by over-optimistic mutual funds. On the empirical side, we first introduce a mutual fund-level measure of market expectations. Then, portfolio analyses and regressions confirm the model's prediction. The results are robust to alternative definitions of the mutual funds’ market beliefs variable that correct for stock picking, and carry predictive power for mutual funds' returns.

Firms can benefit from inaccurate market beliefs

A supplier sells to a retailer who serves a market with uncertain demand. Before the season starts, the retailer preorders from the supplier, who stocks to satisfy at least the preorder. After the actual demand is realized, the retailer can place an at-once order, which is satisfied up to stock availability. Market demand, as perceived by a firm, can differ from what it actually is. We find that a firm can benefit from holding an inaccurate market belief.