The interaction between frames and numeracy in the evaluation of price reductions
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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.
KeywordsNumeracy Framing Heuristic choice Consumer attitudes & behavior Consumer protection
JEL ClassificationC91 D12 D18
The authors contributed in equal measure to the development of the paper. Michele Graffeo gratefully acknowledges the financial support of the European Union and of the Provincia Autonoma di Trento (7th Framework Program “People”, Marie Curie Action—COFUND, project PEOCC). The authors wish to thank M. Pisoni and D. Schönsberg for their help in the data collection of the experiment.
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