Right on Cue? Category-Switching in Online Marketplaces

When and why do producers change the categorization of their offerings? Prior categorization research assumes that producers engage in ongoing efforts to proactively optimize their categorical positioning, but this assumption may not hold for many producers due to their limited attentional capacity. Our theoretical account instead highlights the role of expectation violation cues—salient pieces of information indicating a violation of audience expectations—as triggers that can lead producers to revise their category choice. A longitudinal study of 84,667 Airbnb hosts’ categorization choices finds that negative customer reviews—an important form of expectation violation cue—significantly increase the likelihood of category switching, particularly in categories with heterogeneous expectations. These findings suggest that many producers may be less proactive about their category choices than prior research assumed.