IDEAS home Printed from https://ideas.repec.org/a/spr/epolit/v35y2018i1d10.1007_s40888-017-0059-1.html
   My bibliography  Save this article

The interaction between frames and numeracy in the evaluation of price reductions

Author

Listed:
  • Michele Graffeo

    (University of Trento)

  • Nicolao Bonini

    (University of Trento)

Abstract

In this study we examine two factors which strongly influence the perception of the value of a discount: its presentation format and numeracy (the ability to use and attach meaning to numbers). We described a product on sale with two presentation formats (money-off, e.g. 11€ less and percentage, e.g. 36% less) and we compared the preferences for these formats, presented jointly and separately. The experimental results indicate that the consumers consider the percentage format more attractive than money-off format, but when they are presented jointly the attractiveness of the percentage format decreases, reaching the level of the money-off format. This effect is modulated by the numeric ability of the consumers: the preferences of the highly numerate consumers are not modified by the presentation formats. On the contrary, low numerate consumers are highly attracted by the percentage format but they change radically their preferences once the percentage discount is presented with the money-off format, which indicates the actual amount of saved money. These results indicate that a class of consumers—those with low numeracy—is particularly vulnerable to messages presented with certain specific forms. However, at the same time, it is possible to mitigate this effect by providing pieces of information which can compensate the excessive attractiveness of the percentage format.

Suggested Citation

  • Michele Graffeo & Nicolao Bonini, 2018. "The interaction between frames and numeracy in the evaluation of price reductions," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(1), pages 239-250, April.
    • Handle: RePEc:spr:epolit:v:35:y:2018:i:1:d:10.1007_s40888-017-0059-1
    DOI: 10.1007/s40888-017-0059-1
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40888-017-0059-1
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40888-017-0059-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Steven Woloshin & Lisa M. Schwartz & Megan Moncur & Sherine Gabriel & Anna N. A. Tosteson, 2001. "Assessing Values for Health: Numeracy Matters," Medical Decision Making, , vol. 21(5), pages 382-390, October.
    2. repec:cup:judgdm:v:6:y:2011:i:7:p:638-650 is not listed on IDEAS
    3. Hsee, Christopher K., 1996. "The Evaluability Hypothesis: An Explanation for Preference Reversals between Joint and Separate Evaluations of Alternatives," Organizational Behavior and Human Decision Processes, Elsevier, vol. 67(3), pages 247-257, September.
    4. Isaac M. Lipkus & Greg Samsa & Barbara K. Rimer, 2001. "General Performance on a Numeracy Scale among Highly Educated Samples," Medical Decision Making, , vol. 21(1), pages 37-44, February.
    5. Shane Frederick, 2005. "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 25-42, Fall.
    6. Slovic, Paul & Finucane, Melissa L. & Peters, Ellen & MacGregor, Donald G., 2007. "The affect heuristic," European Journal of Operational Research, Elsevier, vol. 177(3), pages 1333-1352, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:cup:judgdm:v:11:y:2016:i:5:p:441-448 is not listed on IDEAS
    2. A. Peter McGraw & Eldar Shafir & Alexander Todorov, 2010. "Valuing Money and Things: Why a $20 Item Can Be Worth More and Less Than $20," Management Science, INFORMS, vol. 56(5), pages 816-830, May.
    3. repec:cup:judgdm:v:9:y:2014:i:5:p:420-432 is not listed on IDEAS
    4. Mark Schneider & Cary Deck & Mikhael Shor & Tibor Besedeš & Sudipta Sarangi, 2019. "Optimizing Choice Architectures," Decision Analysis, INFORMS, vol. 16(1), pages 2-30, March.
    5. Tamara Stotz & Angela Bearth & Signe Maria Ghelfi & Michael Siegrist, 2020. "Evaluating the Perceived Efficacy of Randomized Security Measures at Airports," Risk Analysis, John Wiley & Sons, vol. 40(7), pages 1469-1480, July.
    6. Carmen Keller & Christina Kreuzmair & Rebecca Leins-Hess & Michael Siegrist, 2014. "Numeric and graphic risk information processing of high and low numerates in the intuitive and deliberative decision modes: An eye-tracker study," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 9(5), pages 420-432, September.
    7. Fasolo, Barbara & Bana e Costa, Carlos A., 2014. "Tailoring value elicitation to decision makers' numeracy and fluency: Expressing value judgments in numbers or words," Omega, Elsevier, vol. 44(C), pages 83-90.
    8. André Mata, 2016. "Proportion dominance in valuing lives: The role of deliberative thinking," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(5), pages 441-448, September.
    9. Fuchsman, Dillon & McGee, Josh B. & Zamarro, Gema, 2023. "Teachers’ willingness to pay for retirement benefits: A national stated preferences experiment," Economics of Education Review, Elsevier, vol. 92(C).
    10. Atanasov, Pavel & Witkowski, Jens & Ungar, Lyle & Mellers, Barbara & Tetlock, Philip, 2020. "Small steps to accuracy: Incremental belief updaters are better forecasters," Organizational Behavior and Human Decision Processes, Elsevier, vol. 160(C), pages 19-35.
    11. Wardley, Marcus & Alberhasky, Max, 2021. "Framing zero: Why losing nothing is better than gaining nothing," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 90(C).
    12. Mao, Wen, 2016. "Sometimes “Fee” Is Better Than “Free”: Token Promotional Pricing and Consumer Reactions to Price Promotion Offering Product Upgrades," Journal of Retailing, Elsevier, vol. 92(2), pages 173-184.
    13. Michele Garagnani, 2023. "The predictive power of risk elicitation tasks," Journal of Risk and Uncertainty, Springer, vol. 67(2), pages 165-192, October.
    14. Satterstrom, Patricia & Polzer, Jeffrey T. & Kwan, Lisa B. & Hauser, Oliver P. & Wiruchnipawan, Wannawiruch & Burke, Marina, 2019. "Thin slices of workgroups," Organizational Behavior and Human Decision Processes, Elsevier, vol. 151(C), pages 104-117.
    15. Chavez, Daniel E. & Palma, Marco A. & Nayga Jr., Rodolfo M., 2017. "When does real become consequential in non-hypothetical choice experiments?," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266327, Southern Agricultural Economics Association.
    16. repec:cup:judgdm:v:10:y:2015:i:6:p:549-563 is not listed on IDEAS
    17. repec:cup:judgdm:v:15:y:2020:i:1:p:93-111 is not listed on IDEAS
    18. Tan, Huimin & Lv, Xingyang & Liu, Xiaoyan & Gursoy, Dogan, 2018. "Evaluation nudge: Effect of evaluation mode of online customer reviews on consumers’ preferences," Tourism Management, Elsevier, vol. 65(C), pages 29-40.
    19. Yigal Attali & Maya Bar-Hillel, 2020. "The False Allure of Fast Lures," Discussion Paper Series dp733, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    20. Jonathan E. Alevy & John A. List & Wiktor L. Adamowicz, 2011. "How Can Behavioral Economics Inform Nonmarket Valuation? An Example from the Preference Reversal Literature," Land Economics, University of Wisconsin Press, vol. 87(3), pages 365-381.
    21. repec:cup:judgdm:v:4:y:2009:i:1:p:20-33 is not listed on IDEAS
    22. Diemo Urbig & Katrin Muehlfeld & Vivien Procher & Arjen Witteloostuijn, 2020. "Strategic Decision-Making in a Global Context: The Comprehension Effect of Foreign Language Use on Cooperation," Management International Review, Springer, vol. 60(3), pages 351-385, June.
    23. Windschitl, Paul D. & Smith, Andrew R. & Rose, Jason P. & Krizan, Zlatan, 2010. "The desirability bias in predictions: Going optimistic without leaving realism," Organizational Behavior and Human Decision Processes, Elsevier, vol. 111(1), pages 33-47, January.
    24. repec:cup:judgdm:v:5:y:2010:i:3:p:182-191 is not listed on IDEAS
    25. Nicolas Eber & Patrick Roger & Tristan Roger, 2024. "Finance and intelligence: An overview of the literature," Journal of Economic Surveys, Wiley Blackwell, vol. 38(2), pages 503-554, April.
    26. repec:cup:judgdm:v:14:y:2019:i:4:p:412-422 is not listed on IDEAS
    27. Zamarro, Gema & Cheng, Albert & Shakeel, M. Danish & Hitt, Collin, 2018. "Comparing and validating measures of non-cognitive traits: Performance task measures and self-reports from a nationally representative internet panel," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 72(C), pages 51-60.

    More about this item

    Keywords

    Numeracy; Framing; Heuristic choice; Consumer attitudes & behavior; Consumer protection;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:epolit:v:35:y:2018:i:1:d:10.1007_s40888-017-0059-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.