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

Abstract

How do consumers interpret changes in the rank of an entity? While ranked lists are ubiquitous, research on dynamic ranks has been limited. Across seven studies (including a study with web data and a Google AdWords field experiment), this research shows that psychological momentum associated with the rank change information explains why consumers reward a rise in rank and penalize a decline in rank. The effects are moderated by factors pertaining to the nature of the entity, consumers’ perception of the reason for the rank change, 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 non-malleable, or when the list is updated more frequently. The investigation identifies an important boundary condition for the effect by demonstrating 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 for managers 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.