Heuristics in Numerical Cognition: Implications for Pricing

@inproceedings{Thomas2008HeuristicsIN,
  title={Heuristics in Numerical Cognition: Implications for Pricing},
  author={Manoj. T. Thomas and Vicki G. Morwitz},
  year={2008}
}
In this chapter we review two distinct streams of literature, the numerical cognition literature and the judgment and decision making literature, to understand the psychological mechanisms that underlie consumers' responses to prices. The judgment and decision making literature identifies three heuristics that manifest in many everyday judgments and decisions - anchoring, representativeness, and availability. We suggest that these heuristics also influence judgments consumers make concerning… 

Figures from this paper

The Left-Digit Bias: When and Why Are Consumers Penny Wise and Pound Foolish?

Consumers’ price evaluations are influenced by the left-digit bias, wherein consumers judge the difference between $4.00 and $2.99 to be larger than that between $4.01 and $3.00, even though the

When Bigger Is Better (and When It Is Not): Implicit Bias in Numeric Judgments

Numeric ratings for products can be presented using a bigger-is-better format ( 1=bad, 5=good ) or a smaller-is-better format with reversed rating poles ( 1=good, 5=bad ). Seven experiments document

Distortion of price discount perceptions through the left-digit effect

Through two experiments, we examined the consumers’ process of comparison of regular and sale price information in advertisements. This is an extension of studies of the left-digit effect with

Commentary on: “an appraisal of behavioral price research (Part I)”

In their article, Cheng and Monroe (2013) undertake a comprehensive review of the major historical, theoretical and empirical developments in the field of behavioral price research. They reveal that

The left digit effect in a complex judgment task: Evaluating hypothetical college applicants

Funding information National Science Foundation, Division of Research on Learning in Formal and Informal Settings, Grant/Award Numbers: DRL-1561214, DRL-1920445 Abstract A left digit effect has been

Proactive Interference in Numeric Evaluations: The Rating Polarity Effect Date – December 20, 2015

Seven experiments document a new form of proactive interference in numerical cognition that can systematically influence consumer evaluations. This interference stems from the polarity of the rating

Is the Discount Really Favorable? The Effect of Numeracy on Price Magnitude Judgment: Evidence From Electroencephalography

Attractive price promotion will induce an unreasonable willingness to purchase, especially through shopping. However, it is not clear how numeracy, one of the essential abilities for understanding

Penny wise and pound foolish? How thinking style affects price cognition

Nine-ending pricing is a common marketing technique because of the traditional belief that consumers pay more attention to the dollar digits and less attention to the penny digits. This research

In the Eye of the Beholder: The Interplay of Numeracy and Fluency in Consumer Response to 99-Ending Prices

Across three laboratory studies, a biometric eye tracking and facial recognition experiment, and a secondary data analysis, we reveal the unique interaction of consumer numeracy and numerical

How and Why 1 Year Differs from 365 Days: A Conversational Logic Analysis of Inferences from the Granularity of Quantitative Expressions

The same quantity can be expressed at different levels of granularity, for example, "1 year," "12 months," or "365 days." Consumers attend to the granularity chosen by a communicator and draw
...

References

SHOWING 1-10 OF 69 REFERENCES

Representativeness revisited: Attribute substitution in intuitive judgment.

The program of research now known as the heuristics and biases approach began with a survey of 84 participants at the 1969 meetings of the Mathematical Psychology Society and the American

Size Does Matter: The Effects of Magnitude Representation Congruency on Price Perceptions and Purchase Likelihood

The numerical cognition literature suggests that numerical stimuli (and hence prices) are represented and encoded in memory as magnitude representations (i.e., judgments of relative “size”). The

An information processing review of the subjective value of money and prices

Like goes with like: The role of representativeness in erroneous and pseudo-scientific beliefs.

As its name implies, the heuristics and biases approach to human judgment has both positive and negative agendas (Griffin, Gonzalez, & Varey, 2001). The positive agenda is to identify the mental

Penny Wise and Pound Foolish: The Left‐Digit Effect in Price Cognition

Through five experiments, we provide a cognitive account of when and why nine-ending prices are perceived to be smaller than a price one cent higher. First, this occurs only when the leftmost digits

Choices, Values, and Frames

We discuss the cognitive and the psy- chophysical determinants of choice in risky and risk- less contexts. The psychophysics of value induce risk aversion in the domain of gains and risk seeking in

Remembering versus knowing: Issues in buyers’ processing of price information

A traditional assumption concerning how prices influence buyers’ purchasing behaviors has been that buyers know the prices of the products and services that they consider for purchase. However,

Patterns of Rightmost Digits Used in Advertised Prices: Implications for Nine-Ending Effects

Analysis of the rightmost digits of selling prices in a sample of retail price advertisements confirmed past findings indicating the overrepresentation of the digits 0, 5, and 9. The high cognitive
...