Mental accounting and acceptance of a price discount (original) (raw)
Related papers
The susceptibility of mental accounting principles to evaluation mode effects
Journal of Behavioral Decision Making, 2009
The present research shows that the predictions and outcomes of mental-accounting tests depend on whether preferences are measured separately (one at a time) or jointly (comparatively). Across five studies, we show that joint evaluation weakens some decision biases (the theater ticket problem, the calculator and jacket problem), but exacerbates others (the basketball game problem). Joint evaluations serve as a check on whether people think the answers they give in separate evaluations make sense or require adjustment. We discuss how the findings impact (1) tests of mental accounting predictions (between vs. within subjects designs), and (2) the normative status of mental accounting.
2017
Although the term Mental Accounting sounds strange to many people but knowingly or unknowingly every people is aware about mental accounting. Every human being allocates their budget mentally before attempt a purchase. Mental accounting plays a decisive role in purchase decision making. Thus after considering this psychological fact of people, the present study tries to explore the importance of mental accounting in purchase decision. The present study doesn't confine to only exploration of importance of mental accounting in purchase decision but also tries to place mental accounting as a vital stage in buying decision making process. The findings of such a study is expected to hold much importance in better understanding the basic and analytical manner in which the customers' minds work while deciding on their purchases; which, in turn, would be helpful in developing various marketing strategies in respect of timing of offers, pricing, payment aids, product launches, transaction facilitation, so on so forth. Moreover, this paper tries to add some more ingredients in mental accounting theory which was propounded by Richard H. Thaler.
Understanding Consumer Behavior through Mental Accounting
Cases on Consumer-Centric Marketing Management, 2014
By setting out from similar studies, this study falls within international literature. The intention is to measure, in connection with Turkey's consumer market, in order to understand the behaviors of the Turkish consumers that are different in terms of cultural variables. The operability of this international theory is achieved by taking advantage of mental accounting. In seeking the essential objective of the research, a working group formed from two subgroups in order to manifest the decisiveness in the purchasing decisions of individuals, as well as the effects of the mental accounting theories. The first subgroup is formed by 100 university students whose ages are varied between 18 and 30. The second group forms from the same number of students at the same age range. According to the results of analysis carried out in the direction of the collected data from the sub groups, the consequences of this
Journal of Marketing Research, 2011
Exposing consumers to extreme prices can influence the price they are willing to pay for both related and unrelated products. Drawing on previous theories of anchoring and adjustment and selective accessibility of judgment-relevant knowledge, the authors provide an account of both asymmetries in the impact of price anchors across product categories and contingencies in the occurrence of these asymmetries. Four studies show the deliberate consideration of price anchors that can play a key role in whether the effect of the anchors will generalize across product categories. Specifically, an explicit comparison of a product to a price anchor increases the accessibility of features that represent a product available at this price. In turn, these thoughts influence the price that consumers are willing to pay for these products. In the absence of this deliberation, however, anchors influence both related and unrelated products, provided no other cognitive activity occurs in the interim.
Effects of Mental Accounting on Intertemporal Choices
GOTEBORG PSYCHOLOGICAL …, 1997
Two experiments with undergraduates as subjects were carried out with the aim of replicating and extending previous results showing that the implication of the behavioral life-cycle hypothesis (H. M. Shefrin & R. H. Thaler, 1988) that people classify assets in different mental accounts (current income, current assets, and future income) may explain how consumption choices are influenced by temporary income changes. In both experiments subjects made fictitious choices between paying for a good in cash or according to a more expensive installment plan after they had received an income which was either less, the same, or larger than usual. In Experiment 1 subjects were supposed to have savings so that the total assets were equal, whereas in Experiment 2 the total assets varied. The results of both experiments supported the role of mental accounts in demonstrating that subjects were unwilling to pay in cash after an income decrease even though they had access to saved money. Thus, in effect they chose to pay more for the good than they had to. Indicating a need for further refinement of the concept of mental account, choices to pay in cash after an income decrease tended to be more frequent when the consumption and savings motives were compatible than when they were incompatible. Furthermore, increasing the total assets made subjects more willing to pay in cash after an income decrease.
Consumer Evaluations of Sale Prices: Role of the Subtraction Principle
Journal of Marketing, 2013
How exactly does the display location of a sale price relative to the original price affect consumers’ evaluations? Across multiple studies, including field studies with actual choices and studies with nonstudent samples, this article shows that consumer evaluations are a function of the display location of the sale price, but such evaluations are moderated by discount depth. First, presenting the smaller number to the right (vs. left) makes it easier to initiate the subtraction task, a phenomenon the authors refer to as the “subtraction principle.” Second, given that evaluating sale prices inherently involves a subtraction task, locating sale prices to the right (vs. left) of the original price facilitates calculation of discount depth, increasing evaluations for moderate discounts but not for low discounts. These effects are potentially reversed in cases of both very low discounts and exaggerated discounts. The findings in this article offer novel and nonintuitive insights into ho...
How much was your shopping basket? Working memory processes in total basket price estimation
Journal of Consumer Psychology, 2009
Although much attention has been paid to recall of a single price, research is lacking in understanding the process of how consumers estimate the total price of a shopping basket. Drawing on research on numeric cognition, memory processes, and mental accounting, we show in five studies that the accuracy of total price estimation as well as the timing of such estimation is systematically influenced by several factors. We find that the length (in syllables) of the prices in the basket and the attention that consumers pay to the prices influence the accuracy of the calculation of the total basket price. Furthermore, our studies also show that the timing of the calculation is influenced by the nature of the items in the basket (i.e., unrelated vs. complementary items).
MENTAL BUDGET: INEFFICIENT CLAUSES OR CONSUMER RATIONAL CHOICES? LESSONS FROM COGNITIVE PSYCOLOGY
This paper aims to highlight how clauses, which are traditionally considered to be inefficient, may actually be desired by consumers. This anomaly originates from the fact that each individual builds a mental budget by dividing the money available among the needs they intend to satisfy. According to consumers' reasoning, money is not fungible, in the sense that amounts cannot be transferred from one expenditure to another. Consumers who behave in this way may sometimes find that they have depleted the amount they budgeted for an item while wanting to buy more of it. Since additional time, efforts and risks are not included in the budget, consumers accept clauses that are traditionally considered to be inefficient, thereby staying within their budget while increasing the amount they can spend for a given good. Thus, for example, since additional time and effort are not allowed for in the budget, a consumer will be willing to make a sacrifice with a value of six for a service that would cost the producer three. This is a p p a r e n t l y an inefficient solution, but allows the consumer to stay within their budget.