Perceived Versus Actual Susceptibility to Normative Influence in the Presence of Defaulting Landlords

Perceived Versus Actual Susceptibility to Normative Influence in the Presence of Defaulting... Using an instant response device within the context of a controlled experiment, we find that people’s self‐assessment of susceptibility to normative influence (SNI) differs substantially from the actual, or true, degree to which they are influenced by the actions of others. Actual SNI, a subconscious reaction to the behavior of those around us, can be altered when participants (falsely) believe their peers differ in their willingness to sign a new lease under various rental reduction incentives when their landlord has defaulted on his mortgage. The results are insensitive to eight alternative measures of actual SNI. This study supports the behavioral finance literature relating to herding in that we show people are very much willing to follow the lead of their peers, even in situations where information gain is not the likely derived benefit. Instead, people appear to herd in our study for social reasons. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Behavioral Finance Emerald Publishing

Perceived Versus Actual Susceptibility to Normative Influence in the Presence of Defaulting Landlords

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1940-5979
DOI
10.1108/19405979201100003
Publisher site
See Article on Publisher Site

Abstract

Using an instant response device within the context of a controlled experiment, we find that people’s self‐assessment of susceptibility to normative influence (SNI) differs substantially from the actual, or true, degree to which they are influenced by the actions of others. Actual SNI, a subconscious reaction to the behavior of those around us, can be altered when participants (falsely) believe their peers differ in their willingness to sign a new lease under various rental reduction incentives when their landlord has defaulted on his mortgage. The results are insensitive to eight alternative measures of actual SNI. This study supports the behavioral finance literature relating to herding in that we show people are very much willing to follow the lead of their peers, even in situations where information gain is not the likely derived benefit. Instead, people appear to herd in our study for social reasons.

Journal

Review of Behavioral FinanceEmerald Publishing

Published: Sep 21, 2011

Keywords: Susceptibility to normative influence; Falsely induced revealed preferences; Residential rental market; Mortgage defaults

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