The Denomination Effect
AbstractLabeled the "denomination effect," study 1 shows in three field studies that the likelihood of spending is lower when an equivalent sum of money is represented by a single large denomination (e.g., one $20 bill) relative to many smaller denominations (e.g., 20 $1 bills). In two of the three field studies, individuals spent more once the decision to spend had been made. Study 2 then shows that consumers deliberately choose to receive money in a large denomination relative to small denominations when there is a need to exert self-control in spending. Study 3 further shows that the denomination effect is contingent on individual differences in people's desire to reduce the pain of paying associated with spending. The results suggest that the denomination effect occurs because large denominations are psychologically less fungible than smaller ones, allowing them to be used as a strategic device to control and regulate spending. (c) 2009 by JOURNAL OF CONSUMER RESEARCH, Inc..
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Consumer Research.
Volume (Year): 36 (2009)
Issue (Month): 4 (December)
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Web page: http://www.journals.uchicago.edu/JCR/
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- Lin, Ying-Ching & Fang, Shiuan-Huei, 2013. "The face value of foreign currency on consumer price perception—The moderating effect of product substitution," Journal of Business Research, Elsevier, vol. 66(6), pages 745-751.
- David Fielding & Stephen Knowles, 2013. "Can You Spare Some Change For Charity? Experimental Evidence On Verbal Cues And Loose Change Effects In A Dictator Game," Working Papers 1318, University of Otago, Department of Economics, revised Nov 2013.
- Vivian Dzokoto & Edwin Mensah & Maxwell Twum-Asante & Annabella Opare-Henaku, 2010. "Deceiving Our Minds: A Qualitative Exploration of the Money Illusion in Post-redenomination Ghana," Journal of Consumer Policy, Springer, vol. 33(4), pages 339-353, December.
- Sotiris Vandoros, 2013. "My five pounds are not as good as yours, so I will spend them," Experimental Economics, Springer, vol. 16(4), pages 546-559, December.
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