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The interaction between frames and numeracy in the evaluation of price reductions

Author

Listed:
  • Michele Graffeo

    (University of Trento)

  • Nicolao Bonini

    (University of Trento)

Abstract

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.

Suggested Citation

  • Michele Graffeo & Nicolao Bonini, 2018. "The interaction between frames and numeracy in the evaluation of price reductions," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(1), pages 239-250, April.
    • Handle: RePEc:spr:epolit:v:35:y:2018:i:1:d:10.1007_s40888-017-0059-1
    DOI: 10.1007/s40888-017-0059-1
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    References listed on IDEAS

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    More about this item

    Keywords

    Numeracy; Framing; Heuristic choice; Consumer attitudes & behavior; Consumer protection;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection

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