Search results

The purpose of this paper is to investigate the possible asymmetric response of inflation expectations to oil price and policy uncertainty shocks.

The authors used the test of asymmetric impulse responses proposed by Kilian and Vigfusson (2011) to explore the issue of asymmetry.

Unlike other studies that assume symmetric effects, this study finds asymmetric effects of oil price and policy uncertainty on inflation expectations for positive and negative shocks and for pre- and post-financial-crisis periods. In particular other things being same, a same magnitude oil price shock has greater effect on inflation expectations in post-crisis period than in pre-crisis period. Moreover, in post-crisis period a positive increasing oil price shock has greater effect on inflation expectations than a negative decreasing oil price shock.

The paper concludes that FED’s greater focus on output stabilization since financial crisis has made inflation expectations less anchored and a sudden surge in oil price may quickly trigger inflation through inflation expectations.

Exploring the issue of the possible asymmetric effects of oil price and economic policy uncertainty on inflation expectations is a relatively new topic (as other studies only assumed symmetry and did not investigate the possible asymmetry in this regard).

This paper aims to investigate how consumers adjust their price expectations for brands in response to previously encountered prices. The effects of two distinct components of price history, focal and contextual, are examined. The focal component represents the role of a brand's own previous price(s) in determining future price expectations. In contrast, the contextual component represents the impact of the prices of previously considered competing brands.

A total of 60 subjects were enrolled to participate in a longitudinal, quantitative, survey‐based study that required them to provide information on brand perceptions, price expectations, brand consideration and choice.

Empirical comparison of several model formulations confirms that both components are crucial in explaining how consumers adjust their price expectations in response to the prices of considered brands. Consistent with a wide body of research, a brand's own previous price exerts the greatest influence on price expectations. However, the extent to which contextual prices are assimilated depends on the composition of consumers' consideration sets. Avenues for future research and implications for brand pricing and positioning are discussed.

The results offer several unique perspectives that stand out from (and build further on) previous research. First, although previous research has examined the effects of competing brands' current prices on brand choices, it has not incorporated the prices of competing brands that may have been observed on previous shopping occasions. Second, measures and assesses the perceived variability within the consumers' consideration sets influences the impact of the contextual component on a brand's current reference price.

The purpose of this research paper is to investigate the role of price and price expectations in service quality evaluations based on a study of the US hotel sector.

The paper is based on an experimental study to test service quality and price congruency through randomly assigned treatments to a quota sample of 120 students.

The research shows that the degree to which subjects' price expectations are met influences their evaluations of service quality. This is especially true in the case of a price loss; when the actual price exceeds the expected price. However, when there is a price gain, subjects' evaluations of service quality were not affected.

The experiment sacrificed external validity for internal control; an artificial stimulus was used in a carefully controlled experimental setting to control the subjects' exposure to price and service manipulations. A small sample size of student subjects was used; only 20 subjects in each treatment group. The results obtained were based on subjects' evaluation of a written script, and not an actual service encounter. By virtue of using an experimental design, the experiment did not consider a broad range of potential factors.

The paper uses an experiment to test the effects of price gains and price losses on consumers' perceptions of the quality of a service encounter.

The purpose of this paper is twofold. First, the study aims to test whether expectations are adaptive in the Auckland housing market. The second purpose is to examine the interplay between expectations and Auckland housing prices.

In this study, two vector error correction models (VECM) are built: one VECM includes survey-based expectations and another one encompasses model-based expectations with the assumption that property investors’ expectations are adaptive. The paper goes on by comparing and examining the results of Granger causality tests and impulse response analyses.

The findings reveal that Auckland property buyers’ expectations are adaptive. In addition, this study provides some evidence of a feedback cycle between Auckland housing prices and expectations.

This study posits that Auckland property buyers’ expectations in the next 12 months are based on three-year price movements with more emphasis being placed on recent price history. This assumption may not be an accurate reflection of true expectations.

This paper helps policymakers to deepen their understanding of Auckland property buyers by showing that their expectations form through the extrapolation of the past price trend.

The study possibly marks the first attempt to test and compare the relationship between housing prices and two forms of expectations: survey-based and model-based. Additionally, this study is probably the first one that empirically examines whether there is a feedback cycle between expectations and property prices in the Auckland housing market.

The purpose of this paper is to estimate the expectations component contained in the asking price of residential property, in order to assess whether expectation plays a relevant role in house price appreciation. The paper tests the role of housing characteristics and value perception on asking price.

The hypothesis tested in this paper is that asking price of residential properties includes an element of price expectation. The analysis utilises a valuation database of about 1,900,000 records for the Spanish housing market, each record contains information on the price that owners expect to obtain on the sale of their property and housing and neighbourhood characteristics. There are three stages to the analysis. Regression analysis is used to estimate the hedonic models and separate that part of the price arising from housing heterogeneity, a two‐stage least squares model estimates the role of expectations and a metadata approach measures those characteristics that explain the change in the explanatory power of the hedonic models over time.

The results show that the explanatory power of hedonic models change with time suggesting that the point in the market cycle modifies the perception of price. The results indicate that the theoretical variables which explain expectations account for about 8 per cent of price, with most of the unexplained element of asking prices due to reasons related with local market conditions.

This paper offers two original insights. First, the paper presents analysis based on asking prices and shows how this could be used as a tool to measure house price expectations. Second, the paper provides further perspectives of the Spanish housing market based on a major database of observations.

Survey data on expected and actual prices received by individual vegetable growers in Florida, Michigan and Texas in 1990 are used to test the rational expectations hypothesis. The use of individual grower data overcomes many of the issues that have limited previous tests of this hypothesis in agriculture. Overall, finds that price expectations of vegetable growers are inconsistent with the rational expectations hypothesis for the majority of vegetable/state combinations studied.

Although the effects of both news sentiment and expectations on price in financial markets have now been extensively demonstrated, the jointness that these predictors can have in their effects on price has not been well-defined. Investigating causal ordering in their effects on price can further our understanding of both direct and indirect effects in their relationship to market price.

We use autoregressive distributed lag (ARDL) methodology to examine the relationship between agent expectations and news sentiment in predicting price in a financial market. The ARDL estimation is supplemented by Grainger causality testing.

In the ARDL models we implement, measures of expectations and news sentiment and their lags were confirmed to be significantly related to market price in separate estimates. Our results further indicate that in models of relationships between these predictors, news sentiment is a significant predictor of agent expectations, but agent expectations are not significant predictors of news sentiment. Granger-causality estimates confirmed the causal inferences from ARDL results.

Taken together, the results extend our understanding of the dynamics of expectations and sentiment as exogenous information sources that relate to price in financial markets. They suggest that the extensively cited predictor of news sentiment can have both a direct effect on market price and an indirect effect on price through agent expectations.

Even traditional financial management firms now commonly track behavioral measures of expectations and market sentiment. More complete understanding of the relationship between these predictors of market price can further their representation in predictive models.

This article extends the frequently reported bivariate relationship of expectations and sentiment to market price to examine jointness in the relationship between these variables in predicting price. Inference from ARDL estimates is supported by Grainger-causality estimates.

The objective of this paper is to demonstrate that the Pygmalion hypothesis is supported in the housing market and the hypothesis that investors are, all too frequently, unrealistically over‐optimistic cannot be rejected.

The methodology in the paper relies on a cross‐sectional questionnaire survey and a longitudinal telephone survey.

The findings in the paper demonstrate that self‐fulfilling prophecies occur in property markets. The effect of self‐fulfilling expectations is common and more powerful than rational real estate fundamentals. The consistent pattern of significant over‐forecasting of housing prices suggest that the hypothesis that investors are, most of the time, over‐confident cannot be rejected.

In the longitudinal survey in this paper, only limited samples were secured. The developmental change of attitudes and buying behaviors over time was not observed. People's price expectations might be different from those reported in the first three waves of survey, as real estate fundamentals change from time to time.

In the paper a forward looking approach is used to solicit people's views on current and future housing prices, investment considerations and sentiment over time. An increase in property price being simply the outcome of self‐fulfilling expectations – the Pygmalion Effect will be signaled to housing participants. Studying people's confidence and sentiments helps understand speculative enthusiasm or ‘bubble”.

The longitudinal survey in the paper on people's price expectations is the first of its kind in Hong Kong. The results are beneficial to policy makers, homeowners, potential homebuyers and investors. Housing decisions of potential homebuyers can be made more rationally and Government officials can have more reliable property information and data for policy formulation.

The primary aim of this chapter is to examine whether the recent increase in world oil prices has affected inflation expectations and stock market returns in major OECD countries. The key findings are as follows. First, we found no evidence to support the presence of a long term relationship between oil prices and inflation expectations – measured by the difference between yields of inflation indexed and non-inflation indexed government bonds – over the sample between early 2003 and late 2006. Second, higher oil prices are found to lead to expectations of higher inflation. This evidence is stronger over the period where oil prices had been higher and signs of capacity constraints in the economy were emerging. Third, the impact of higher oil prices on stock market returns differs among countries. While higher oil prices are found to adversely affect stock market returns in the United States, the United Kingdom and France, the effects are positive in Canada and Australia as these countries are significant exporters of energy resources.

This paper aims to investigate how user expectations affect value-added service (VAS) investment and pricing decisions of two-sided platforms. It draws on the information asymmetry theory and offers suggestions on how platform operators can manage user expectations.

According to the game theory, this study considers three user expectations (responsive, passive and wary). By framing the Hotelling duopoly model and comparing the VAS investment, price and platform profits, the optimal platform decision is analyzed and discussed.

The conclusions demonstrate that the monopolistic two-sided platform obtains more profits from the informed users with responsive expectations than uninformed users with passive or wary expectations. The marginal investment cost and cross-network externalities are two key factors that determine the platform's VAS investment and pricing strategies of passive or wary users. Furthermore, considering the expectation preferences, i.e. the uniformed users hold wary expectations with more information and hold passive expectations with less or no information, the results suggest that the proportion of wary users to all uninformed users increases the platform's VAS investment, profits and the price of informed users, and increase (decrease) the price of uninformed users when the cross-network externalities of informed users are relatively small (larger).

These results can provide insightful enlightenment into how platform operators utilize bilateral users' expectations and information level to guide their VAS investment and pricing decisions.

This paper is one of the first to explore the impact of three user expectations and the heterogeneity of preferences in informing users' passive or wary expectations, based on different levels of information on the decision-making of two-sided platforms regarding VAS.