Pizzas : π or square? psychophysical biases in area estimation
Krider, Robert E.
|Source||Marketing Working Paper Series ; MKTG 99.138|
|Summary||Many product categories, from pizzas to real estate, present buyers with purchase decisions involving complex area judgments. Does a square look larger or smaller than a circle? How much smaller does a circle of 8" diameter look when compared to one with a 10" diameter? In this paper, we propose a psychophysical model of how consumers make area judgments. The model involves consumers making effort-accuracy trade-offs that lead to heuristic processing of area judgments and systematic shape-and size-related biases. The model predicts that a single linear dimension inappropriately dominates the two-dimensional area comparison task, and that contextual factors affect which linear dimension dominates the task. The relative use of the second dimension depends on its relative salience which can be affected by the manner in which information is presented. A set of five studies--four laboratory experiments and one field experiment, systematically test model predictions. The first study tests the proposition that consumers anchor on a single linear dimension when comparing areas. It shows how presentation context can alter which dimension is anchored on. The next study shows that this bias reversal carries through to consumers' reservation price--people are willing to pay more for objects that appear larger. Study 3 describes a laboratory experiment that tests whether the degree of adjustment is dependent on the salience of the secondary (non-anchoring) dimension; again, reservation price is affected, and we show strong effects of second dimension salience on reservation price. In study 4 we explore the conditions under which a normatively correct rather than heuristic-based biased judgment will be made. Finally, Study 5 establishes the importance of package shape to marketers, by testing in a field experiment whether differences in shape of products affect sales. Overall, results suggest that the manner in which information is presented affects the relative salience of dimensions used to compute areas, and can change the price consumers are willing to pay by over 50%. Underlining the external validity of these findings, container shape can significantly affect quantity purchased and overall sales. The paper highlights biases in area comparison judgments as a function of area shape and size. The model is parsimonious, demonstrates good predictive ability, and explains seemingly contradictory results in the cognitive psychology literature. Implications for pricing, product design, packaging, and retailing are suggested.|
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