They fully expect it to be followed by inflation - they just do not know when. Thus, its nature is more transitory. Assured of low prices and preoccupied with economic survival - people become strongly risk averse. While in times of inflation people are seeking to protect the value of their money - in times of deflation people are in pursuit of sheer livelihood. A dangerous 'stability' sets in.
People invest in land, cash and, the more daring, in bonds.
Banks do the same. In such times, ideologies are the first victims. They are replaced by philosophies and worldviews. People become much more pragmatic. They look to the possible rather than to the ideal.