The Stickiness of Category Labels : Audience Perception and Evaluation of Change in Creative Markets

Strategy & Business Policy

Speaker: Greta HSU 

Professor UC Davis

Videoconference

Abstract :   

Producers often seek to change their market positions over time. Successful repositioning is rare, however, as audiences tend to devalue offerings that depart from a producer’s past creations. Prior research suggests that this penalty arises as audiences perceive offerings from actors who have repositioned to be inferior. In this paper, we explore another possible cause of this devaluation: a reception penalty that occurs due to the way that categories distort perception, causing evaluators to fail to correctly categorize offerings that differ from a producer’s past work. We propose that this mechanism may be differentially at play depending on the amount of prior experience evaluators have with a producer. We test our theory using data from Goodreads.com on authors within the book publishing industry, 2007-2017. We first build a novel deep-learning framework to predict categorization of a given book based solely on an author’s description of its content. We then use data on how Goodreads users categorize and evaluate books, as well as their past reading behavior, to test for evidence of our proposed mechanism. Overall, our results extend understanding of the processes that generate categorical constraints and how these may differ among various types of exchange partners.