Consumer Confusion of Percent Differences

43 Pages Posted: 22 Nov 2006

See all articles by Justin Kruger

Justin Kruger

University of Illinois at Urbana-Champaign; New York University (NYU); New York University (NYU) - Department of Marketing

Patrick Vargas

University of Illinois at Urbana-Champaign - College of Communications

Date Written: September 1, 2006

Abstract

The present research investigated consumers' intuitions about percent differences. We found that the perceived difference between two quantities compared on a percent scale varies as a function of the target of the comparison. The subjective price difference between a $1500 and a $1000 moped, for instance, increased when the former was described as 50% more than the latter than when the latter was described as 33% less than the former (Experiment 1). This effect (1) is limited to comparisons made on a ratio scale, (2) varies as a function of the percent difference between the two quantities, (3) applies not only to price, but to other quantifiable attributes (Experiments 2-4). As well, Experiment 5 found that the bias reduced (but not eliminated) with financial incentives for accuracy, and persists even among highly numerate individuals. Discussion focuses on the source and implications of this bias.

Keywords: judgment & decision making, heuristics and biases, consumer behavior, advertising, innumeracy

Suggested Citation

Kruger, Justin and Vargas, Patrick, Consumer Confusion of Percent Differences (September 1, 2006). Available at SSRN: https://ssrn.com/abstract=946238 or http://dx.doi.org/10.2139/ssrn.946238

Justin Kruger (Contact Author)

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
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New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
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New York University (NYU) - Department of Marketing ( email )

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New York, NY
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Patrick Vargas

University of Illinois at Urbana-Champaign - College of Communications ( email )

601 E John St
Champaign, IL 61820
United States

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