Price Reductions and Cognitive Fluency

If the mental calculation required to determine the discount given on a product is difficult then we often misjudge the magnitude of the reduction.

This “ease-of-computation” effect for judging price reductions is obviously related to other recent studies looking at ‘cognitive fluency‘ and is another way to manipulate and be manipulated through product pricing.

Consumers’ judgements 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. […] 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).

via Barking Up the Wrong Tree