Marketing Letters

, Volume 12, Issue 1, pp 5–12

Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay

Authors

  • Drazen Prelec
    • Sloan School of ManagementMIT
  • Duncan Simester
    • Sloan School of ManagementMIT
Article

DOI: 10.1023/A:1008196717017

Cite this article as:
Prelec, D. & Simester, D. Marketing Letters (2001) 12: 5. doi:10.1023/A:1008196717017

Abstract

In studies involving genuine transactions of potentially high value we show that willingness-to-pay can be increased when customers are instructed to use a credit card rather than cash. The effect may be large (up to 100%) and it appears unlikely that it arises due solely to liquidity constraints. In addition to demonstrating the effect, we provide a methodology for detecting it, and our findings suggest a source of variance to test alternative explanations.

credit cardsoverspendingmental accounting

Copyright information

© Kluwer Academic Publishers 2001