Peoples' expectations will play a major role in determining choices about residential mobility, financial investments, and psychological investments in neighborhoods. This chapter explores how households, property owners, and residential developers go about acquiring information, forming expectations, assessing risks and ultimately making choices under terms of uncertainty. It presents a conceptual model of this process and synthesizes empirical research about how people form expectations and make decisions, drawing implications for neighborhood change processes. Two fundamental propositions are advanced. The proposition of asymmetric informational power states that information about the absolute decline of the current neighborhood will prove more powerful in altering residents' and owners' mobility and investment behaviors than information about its relative decline or its absolute improvement. The proposition of racially encoded signals states that key types of information shaping perceptions and expectations about the neighborhood will influence the behaviors of residents and property owners; a significant amount of such information lies encoded within the share and the growth of the black population in the neighborhood.
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