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