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The moderating effects of need for cognition and cognitive effort on responses to multi-dimensional prices

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  • Hyeong Kim
  • Thomas Kramer

Abstract

We investigate how need for cognition and cognitive effort associated with multi-dimensional pricing combine to influence demand. Experiment 1 shows that individuals with low (vs. high) need for cognition are less likely to purchase products that list price and relative discount separately. The direction of the effect of need for cognition on demand is found to depend on whether consumers’ inaccurate arithmetic generally leads them to overestimate or underestimate final prices. Therefore, experiment 2 finds that individuals with low (vs. high) NFC are more likely to purchase products that list price and relative surcharge separately. As expected, the effect is eliminated for absolute discounts or surcharges and mediated by recalled purchase prices. Copyright Springer Science + Business Media, LLC 2006

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  • Hyeong Kim & Thomas Kramer, 2006. "The moderating effects of need for cognition and cognitive effort on responses to multi-dimensional prices," Marketing Letters, Springer, vol. 17(3), pages 193-203, July.
    • Handle: RePEc:kap:mktlet:v:17:y:2006:i:3:p:193-203
    DOI: 10.1007/s11002-006-5928-2
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    Cited by:

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    4. Danny Weathers & Scott Swain & Jay Carlson, 2012. "Why consumers respond differently to absolute versus percentage descriptions of quantities," Marketing Letters, Springer, vol. 23(4), pages 943-957, December.
    5. Bambauer-Sachse, Silke & Grewal, Dhruv, 2011. "Temporal Reframing of Prices: When Is It Beneficial?," Journal of Retailing, Elsevier, vol. 87(2), pages 156-165.
    6. Peter D. Lunn & Marek Bohacek, 2017. "Price transparency in residential electricity: Experiments for regulatory policy," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 1(2), pages 31-37, September.
    7. Hyeong Kim & Thomas Kramer, 2006. "“Pay 80%” versus “get 20% off”: The effect of novel discount presentation on consumers’ deal perceptions," Marketing Letters, Springer, vol. 17(4), pages 311-321, December.
    8. Blaufus, Kay & Bob, Jonathan & Hundsdoerfer, Jochen & Kiesewetter, Dirk & Weimann, Joachim, 2010. "It's all about tax rates: An empirical study of tax perception," arqus Discussion Papers in Quantitative Tax Research 106, arqus - Arbeitskreis Quantitative Steuerlehre.
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    11. Ladeira, Wagner & Rasul, Tareq & Perin, Marcelo Gattermann & Santini, Fernando, 2023. "The bright side of disorganization: When surprise generates low-price signals," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
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    13. Kamleitner, Bernadette & Mandel, David R. & Dhami, Mandeep K., 2011. "Risky discounts: Do people prefer them on a per-item or per-purchase basis and why?," Journal of Economic Psychology, Elsevier, vol. 32(6), pages 951-961.

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