Scenario Mark has chosen to live off-campus next semester, and he must find transportation to...

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Finance

Scenario

Mark has chosen to live off-campus next semester, and he must find transportation to get him to classes and back to his new apartment. He has enough money to buy either an old four-door sedan or a used motorcycle. Assume that Mark has answered the questions on the following questionnaire in the manner shown:

Please place an X on each of the scales to reflect your level of agreement or disagreement with the following statements:

1. It is important to me that my transportation is comfortable through all four seasons.

2. I believe that if I buy the motorcycle I will have comfortable transportation through all four seasons.

3. I believe that if I buy the car I will have comfortable transportation through all four seasons.

4. It is important to me that I not waste a lot of time searching for parking spaces on campus.

5. I believe that if I buy the motorcycle I will be able to easily find parking places on campus.

6. I believe that if I buy the car I will be able to easily find parking places on campus.

7. It is important to me to be able to transport my roommates to campus and back.

8. I believe that if I buy the motorcycle I will be able to transport my roommates.

9. I believe that if I buy the car I will be able to transport my roommates.

10. It is important to me to go along with what my parents want me to do.

11. I believe that my parents want me to buy the motorcycle.

12. I believe that my parents want me buy the car.

13. It is important to me to go along with what my friends want me to do.

14. I believe that my friends want me to buy the motorcycle.

15. I believe that my friends want me to buy the car.

The formula for the Theory of Reasoned Action (TORA) is as follows:

BI =w1 [A(act)] + w2 [SN(act)]

BI= Behavioral Intent

w1 and w2= weights (typically these are previously determined)

A (act)=Attitude toward an action (e.g., purchase)

SN (act) = Subjective Normm

where:

Bi = Belief that an action (e.g., purchase) will lead to a consequence i

Ei1= Evaluation of importance/desirability of consequence

i = Consequences 1,2,...m

where:

NBj= Belief that a reference group (j) wants you to perform a certain action (e.g., purchase)

MCj=Motivation to comply with reference group

j = Reference groups 1,2,..n

In similar studies, it has been found that the Attitude Toward the Act component is a slightly more important determinant of Behavioral Intent than is the Subjective Norm component. Therefore, wl is set at 0.6 and w2 is set at 0.4.

Consequences (m = 3):

1. Having comfortable transportation through all four seasons.

2. Having the ability to easily find parking spaces.

3. Having the ability to transport roommates.

Reference Groups (n = 2):

1. Parents.

2. Friends.

Task

Please use the TORA formula, the preceding information regarding wl and w2, and Mark's questionnaire answers to calculate his Behavioral Intent toward each of the two options: BI(buying the motorcycle) and BI(buying the car).

Show all of your work, and discuss the implications of your results, including a discussion of the A(act) and SN results for each purchase option, as well as your prediction of which purchase Mark will make.

Hint: You may want to begin by identifying the type of information each of the items on the questionnaire is designed to gather: B, E, NB, or MC.

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