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Mental Accounting and Changes in Price: The Frame Dependence of Reference Dependence

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  • Heath, Timothy B
  • Chatterjee, Subimal
  • France, Karen Russo

Abstract

Mental accounting principles for multiple events were replicated and then extended to pricing situations that were designed to moderate these principles if reference dependence is proportional (i.e., if consumers evaluate events in terms of proportional deviations from reference states rather than raw deviations). Prices were stated with or without popular percentage-based pricing frames such as "33 percent off." Mental accounting principles generally prevailed in the absence of percentage-based frames. However, percentage-based frames altered two principles and increased tendencies toward the others. The findings demonstrate that mental accounting principles, price perception, and reference dependence are sensitive to the ways in which deviations from reference states are framed. Copyright 1995 by the University of Chicago.

Suggested Citation

  • Heath, Timothy B & Chatterjee, Subimal & France, Karen Russo, 1995. " Mental Accounting and Changes in Price: The Frame Dependence of Reference Dependence," Journal of Consumer Research, Oxford University Press, vol. 22(1), pages 90-97, June.
  • Handle: RePEc:oup:jconrs:v:22:y:1995:i:1:p:90-97
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    File URL: http://dx.doi.org/10.1086/209437
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    Cited by:

    1. Friedrich, James & Lucas, Gale & Hodell, Emily, 2005. "Proportional reasoning, framing effects, and affirmative action: Is six of one really half a dozen of another in university admissions?," Organizational Behavior and Human Decision Processes, Elsevier, vol. 98(2), pages 195-215, November.
    2. Devetag, M Giovanna, 1999. "From Utilities to Mental Models: A Critical Survey on Decision Rules and Cognition in Consumer Choice," Industrial and Corporate Change, Oxford University Press, vol. 8(2), pages 289-351, June.
    3. Martín Egozcue & Sébastien Massoni & Wing-Keung Wong & Ričardas Zitikis, 2012. "Integration-segregation decisions under general value functions : "Create your own bundle -- choose 1, 2, or all 3 !"," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00747008, HAL.
    4. Marco Bertini & Luc Wathieu, 2008. "Research Note—Attention Arousal Through Price Partitioning," Marketing Science, INFORMS, vol. 27(2), pages 236-246, 03-04.
    5. Li, Meng & Chapman, Gretchen B., 2013. "A big fish or a small pond? Framing effects in percentages," Organizational Behavior and Human Decision Processes, Elsevier, vol. 122(2), pages 190-199.
    6. Franses, Ph.H.B.F. & Vlam, A., 2011. "Financial innumeracy," Econometric Institute Research Papers EI 2011-01, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    7. repec:eee:jouret:v:88:y:2012:i:4:p:512-527 is not listed on IDEAS
    8. 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.
    9. Isabella, Giuliana & Pozzani, Alexandre Ierulo & Chen, Vinicios Anlee & Gomes, Murillo Buissa Perfi, 2012. "Influência dos anúncios de desconto sobre o comportamento dos consumidores," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 52(6), November.
    10. repec:spr:amsrev:v:3:y:2013:i:3:d:10.1007_s13162-013-0043-z is not listed on IDEAS
    11. V. I. Yukalov & D. Sornette, 2014. "Manipulating decision making of typical agents," Papers 1409.0636, arXiv.org.
    12. repec:hal:journl:halshs-00747008 is not listed on IDEAS
    13. Kevin Dayaratna & P. Kannan, 2012. "A mathematical reformulation of the reference price," Marketing Letters, Springer, vol. 23(3), pages 839-849, September.
    14. Ranyard, Rob & Missier, Fabio Del & Bonini, Nicolao & Duxbury, Darren & Summers, Barbara, 2008. "Perceptions and expectations of price changes and inflation: A review and conceptual framework," Journal of Economic Psychology, Elsevier, vol. 29(4), pages 378-400, August.
    15. repec:eee:jouret:v:89:y:2013:i:2:p:190-206 is not listed on IDEAS
    16. Azar, Ofer H., 2009. "Do consumers make too much effort to save on cheap items and too little to save on expensive items? experimental results and implications for business strategy," MPRA Paper 20962, University Library of Munich, Germany.
    17. Chu, Hsunchi & Liao, Shuling, 2010. "Buying while expecting to sell: The economic psychology of online resale," Journal of Business Research, Elsevier, vol. 63(9-10), pages 1073-1078, September.

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