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The Effects of Numeracy and Brand Preference on the Left-Digit Effect

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Title: The Effects of Numeracy and Brand Preference on the Left-Digit Effect
Creators: Weiner, David
Advisor: Peters, Ellen
Issue Date: 2012-12
Abstract: A left-digit effect (LDE) is said to occur when a change in the left-most digit of a value (e.g., when \$4.00 drops to \$2.99 versus when it drops from \$4.01 to \$3.00) significantly increases consumer judgments of the price difference. Thomas and Morwitz (2005) showed that it was the change in the left-digit, rather than the one-cent drop, that affects these perceptions. This effect has domain invariance, meaning the left-digit effect manifests not only in prices, but also in other types of nine-ending numbers (Thomas & Morwitz, 2005). The finding has important implications for pricing practices. The present study examined whether individual differences in numeracy or affective information based on brand preference influence the left-digit effect. Peters et al. (2006) defined numeracy as the ability to use and understand basic probability and mathematical concepts. People range widely in their ability to use numbers, and the highly numerate encode numeracy and non-numeric information differently than the less numerate when making decisions. We predict that numeracy ability along with brand preference can help negate the left-digit effect and lead to better magnitude perceptions. Using a modification of the experimental paradigm from Thomas and Morwitz, we showed participants two 12-packs of soda that either have a brand name (Coke and Pepsi) or are generic (the control condition). Subsequently, subjects stated their preference between the sodas (e.g., ranging from strongly prefer Coke to strongly prefer Pepsi in the experimental condition). Subjects then took an eight-question math test to assess their numeracy ability (Weller et al., 2012). Results indicated that overall more numerate individuals paradoxically showed larger LDEs. Participants did not show significantly larger LDEs when brand names were used versus when they were not.
Embargo: No embargo
Series/Report no.: The Ohio State University. Department of Psychology Honors Theses; 2012
Keywords: decision making
brand
consumer behavior
individual differences
numeracy
URI: http://hdl.handle.net/1811/53178
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