The Ease-of-Computation Effect: The Interplay of Metacognitive Experiences and Naive Theories in Judgments of Price Differences

Abstract

Consumers’ judgments of the magnitude of numerical differences are influenced by the ease of mental computations. The results from a set of experiments show that ease of computation can affect judgments of the magnitude of price differences, discount magnitudes, and brand choices. Participants seem to believe that it is easier to judge the size of a larger difference than that of a smaller difference. In the absence of appropriate corrective steps, this naive belief can lead to systematic biases in judgments. For example, when presented with two pairs of numbers, participants incorrectly judged the magnitude of the difference to be smaller for pairs with difficult computations (e.g., 4.97 – 3.96, an arithmetic difference of 1.01) than for pairs with easy computations (e.g., 5.00 – 4.00, an arithmetic difference of 1.00). The effect does not manifest when judgments do not entail mental computations or when participants are made aware that the ease or difficulty is caused by computational complexity. Furthermore, this effect is mitigated when participants’ prior experience is manipulated in a learning phase of the experiment. The results have implications for buyers and sellers and for understanding the role of metacognitive experiences in numerical judgments.

Price Competition with Consumer Confusion

“…Marketing research has provided evidence that consumers have difficulties in comparing prices presented differently or prices presented in similar but involved formats (see Estelami 1997, Morwitz et al 1998, and Thomas and Morwitz 2009). Economics experiments (see, e.g., Kalayci andPotters 2011 andKalayci 2011) show that increasing the number of product attributes or price scheme dimensions can create confusion and lead to suboptimal consumer choices.…”

Slider Scale or Text Box: How Response Format Shapes Responses

“…We propose that when using a slider scale, people judge price magnitudes by assessing the visual distance from the starting as well as from the end point of the slider scale. Consistent with a dual-process model of price cognition (Monroe and Lee 1999;Morwitz 2009a, 2009b), we propose that while the reflective part of the brain deals with deliberative numeric comparisons, the reflexive part of the brain spontaneously assesses the visual distances from the starting and end points of the slider scale. Price magnitude judgments are influenced by the distance from the starting point ("how far is it from the lowest possible value") as well as the distance from the end point of the scale ("how close is it to the highest possible value").…”

“…Psychologists studying the mental representation of numbers (Dehaene 2001;Dehaene et al 2008;Izard and Dehaene 2008) as well as consumer researchers (Adaval 2013;Adaval and Monroe 2002;Bagchi and Davis 2016;Biswas et al 2013;Lembregts and Pandelaere 2013;Monroe and Lee 1999;Schley, Lembregts, and Peters 2017;Morwitz 2009a, 2009b;Valenzuela and Raghubir 2015) agree that numbers are represented not only symbolically as arithmetic and verbal codes, but also as asymbolic semantic representations best conceptualized as a nonlinear mental number line. In their dual-process model of price cognition, Thomas and Morwitz (2009a) have explained how everyday price judgments are influenced by the interplay of conscious symbolic representations and the nonconscious asymbolic representations on the mental number line.…”

“…In their dual-process model of price cognition, Thomas and Morwitz (2009a) have explained how everyday price judgments are influenced by the interplay of conscious symbolic representations and the nonconscious asymbolic representations on the mental number line. This mental number line does not resemble the linear arithmetic ruler.…”

Consumer adoption of group-buying auctions: an experimental study

“…[41], Li [46], Srivastava and Chakravarti [59], Thomas and Morwitz [61] and Zauberman et al [64]. consumers' perceived psychological risk.…”