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On the perceived value of money: the reference dependence of currency numerosity effects (RV 2002/124/MKT)

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Money illusion research shows that the nominal (face) value of money affects consumer perceptions of its real value. Recent mixed findings on consumer valuations in different currencies suggest that the underlying anchoring and adjustment processes are complex. We develop a framework to identify boundary conditions that specify the direction of anchoring effects on valuations in different currencies. Consumers anchor on the numerosity of the nominal difference between prices and salient referents (e.g., budgets) when evaluating transactions. Support for our framework comes from a series of experiments that evoke different reference standards. We discuss the implications and opportunities for future research.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2006/2006-21.pdf

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Copyright INSEAD. All rights reserved