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My five pounds are not as good as yours, so I will spend them

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  • Sotiris Vandoros

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Abstract

An experimental approach is used to examine how money denomination and the choice between or availability of coins and banknotes may influence consumers’ purchasing behaviour. Evidence shows that for small amounts of money, consumers may prefer a smaller monetary value in banknotes rather than a higher value in coins. Findings also suggest that people carrying coins are more likely to make a purchase of small value than people not carrying coins. Copyright Economic Science Association 2013

Suggested Citation

  • Sotiris Vandoros, 2013. "My five pounds are not as good as yours, so I will spend them," Experimental Economics, Springer;Economic Science Association, vol. 16(4), pages 546-559, December.
  • Handle: RePEc:kap:expeco:v:16:y:2013:i:4:p:546-559
    DOI: 10.1007/s10683-013-9351-2
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    References listed on IDEAS

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    1. van Hove, Leo & Heyndels, Bruno, 1996. "On the optimal spacing of currency denominations," European Journal of Operational Research, Elsevier, vol. 90(3), pages 547-552, May.
    2. Manoj Thomas & Kalpesh Kaushik Desai & Satheeshkumar Seenivasan, 2011. "How Credit Card Payments Increase Unhealthy Food Purchases: Visceral Regulation of Vices," Journal of Consumer Research, Oxford University Press, vol. 38(1), pages 126-139.
    3. Bruce, Vicki & Gilmore, David & Mason, Lynn & Mayhew, Pamela, 1983. "Factors affecting the perceived value of coins," Journal of Economic Psychology, Elsevier, vol. 4(4), pages 335-347, December.
    4. Cannon, Edmund & Cipriani, Giam Pietro, 2006. "Euro-Illusion: A Natural Experiment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(5), pages 1391-1403, August.
    5. Van Hove, Leo, 2001. "Optimal Denominations for Coins and Bank Notes: In Defense of the Principle of Least Effort," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(4), pages 1015-1021, November.
    6. Kooreman, Peter & Faber, Riemer P & Hofmans, Heleen M J, 2004. "Charity Donations and the Euro Introduction: Some Quasi-Experimental Evidence on Money Illusion," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(6), pages 1121-1124, December.
    7. Manjong Lee & Neil Wallace & Tao Zhu, 2005. "Modeling Denomination Structures," Econometrica, Econometric Society, vol. 73(3), pages 949-960, May.
    8. Wynne, Mark A., 1997. "More on optimal denominations for coins and currency," Economics Letters, Elsevier, vol. 55(2), pages 221-225, August.
    9. Telser, L. G., 1995. "Optimal denominations for coins and currency," Economics Letters, Elsevier, vol. 49(4), pages 425-427, October.
    10. Furnham, Adrian, 1983. "Inflation and the estimated sizes of notes," Journal of Economic Psychology, Elsevier, vol. 4(4), pages 349-352, December.
    11. Kohli, Ulrich, 1988. "A note on banknote characteristics and the demand for currency by denomination," Journal of Banking & Finance, Elsevier, vol. 12(3), pages 389-399, September.
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    Citations

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    Cited by:

    1. Runnemark, Emma & Hedman, Jonas & Xiao, Xiao, 2014. "Do Consumers Pay More Using Debit Cards than Cash? An Experiment," Working Papers 2014:21, Lund University, Department of Economics.
    2. David Fielding & Stephen Knowles, 2015. "Can you spare some change for charity? Experimental evidence on verbal cues and loose change effects in a Dictator Game," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 718-730, December.
    3. Junyi Shen & Hiromasa Takahashi, 2017. "The tangibility effect of paper money and coins in an investment experiment," Economics and Business Letters, Oviedo University Press, vol. 6(1), pages 1-5.

    More about this item

    Keywords

    Field experiment; Currency denomination; Banknotes; Coins; C93;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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