Pennies a Day

Journal of Consumer Research, Inc.

PenniesaDay: The Effect of Temporal Reframing on Transaction EvaluationAuthor(s): JohnT.GourvilleSource: Journal of Consumer Research, Vol. 24, No. 4 (March 1998), pp. 395-403Published by: The University of Chicago PressStable URL: http://www.jstor.org/stable/10.1086/209517 .Accessed: 08/06/2013 13:35

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Pennies-a-Day: The Effect of TemporalReframing on Transaction Evaluation

JOHN T. GOURVILLE*

To increase transaction compliance, marketers sometimes temporally reframethe cost of a product from an aggregate one-time expense to a series of smallongoing expenses, often in spite of the fact that the physical payments remainaggregated. This temporal reframing is identified in this article as the pennies-a-day (PAD) strategy. A two-step consumer decision-making process of (1)comparison retrieval and (2) transaction evaluation is posited to explain the effec-tiveness of this strategy. In a series of laboratory studies, general support forPAD effectiveness across a range of product categories and specific support forthe proposed two-step model was found. The PAD framing of a target transactionis shown to systematically foster the retrieval and consideration of small ongoingexpenses as the standard of comparison, whereas an aggregate framing of thatsame transaction is shown to foster the retrieval and consideration of large infre-quent expenses. This difference in retrieval is shown to significantly influencesubsequent transaction evaluation and compliance.

M In contrast to practice, two prominent theories of de-arketers are continually searching for ways to makegoods and services appear more attractive to target cision making predict that PAD strategies should haveconsumers. One method used to achieve this goal is the either no effect or a counterproductive effect on transac-temporal reframing of a transaction from an aggregate tion compliance. First, according to standard economicexpense to a series of small daily or ongoing expenses theory, the reframing of a transaction from an aggregatea method identified in this article as the pennies-a-day to a PAD expense should not alter compliance, unless(or PAD) strategy. there is a corresponding change in the physical cash

Although largely neglected by researchers, the wide- flows. The concept of descriptive invariance (Tver-spread use of PAD strategies by marketing practitioners sky, Sattath, and Slovic 1988) predicts that preferencessuggests that they can be effective. For years, Sally should be invariant across different presentations of theStruthers has told us that for only 72 a day we can same stimuliin this case, the same physical cashfeed a starving child, and Chicago Public Radio has flows.an ongoing membership drive in which individuals are Second, prospect theory (Kahneman and Tverskyasked to join their Dollar-a-Day Club. In more main- 1979) and Thalers (1985) rules of hedonic editingstream consumer settings, magazine publishers high- indicate that consumers should prefer to psychologicallylight their low per-issue subscription prices, and one integrate a series of small costs into one large bundledChicago mattress retailer claims that you can sleep in cost. Rather than experience many small costs, with eachcomfort on one of their beds for only 10 a night. cost assessed at the steepest and most painful part of theThese and other PAD claims typically are made in spite prospect-theory value function, a consumer should takeof the fact that the underlying physical payments remain advantage of the flattening of the value function at in-aggregated. creasingly larger losses and integrate those costs into a

single expense. However, this prescription for integratingcosts implies that a PAD strategy should backfirebymagnifying rather than reducing a transactions perceived*John T. Gourville is an assistant professor of marketing at the Gradu-

ate School of Business Administration, Harvard University, Boston, MA cost relative to a more aggregate framing.02163. This article is based on the authors doctoral dissertation at With this apparent contradiction between existing prac-the University of Chicagos Graduate School of Business. The author tice and theory in mind, the present research addressesgratefully acknowledges his dissertation chair Steve Hoch, as well as

two important issues. First, can PAD strategies be effec-committee members Josh Klayman, John Deighton, Sanjay Dhar, Robintive at influencing consumers evaluations of product of-Hogarth, and Larry Barsalou. He also appreciates the helpful comments

and suggestions of the reviewers, the associate editor, and the editor. ferings? Second, if they can be effective, what are theFinally, special thanks are due to members of the Center for Decision underlying psychological processes that drive this effec-Research at the University of Chicago for their feedback and support. tiveness?

395q 1998 by JOURNAL OF CONSUMER RESEARCH, Inc. Vol. 24 March 1998

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396 JOURNAL OF CONSUMER RESEARCH

Telephone Study. In a second study, subjects werePAD: EVIDENCE OF ITSasked to imagine that they were in a position to receiveEFFECTIVENESSrather than spend funds. In specific, 54 subjects wereshown an offer to switch long-distance telephone carriers.Given the real-world use of PAD strategies in selectHalf were asked for the minimum monthly savings theyproduct categories, it seems logical to look for evidencewould require to switch (PAD framing), and half wereof PAD effectiveness there. Magazines represent one suchasked for the minimum yearly savings they would requirecategory, in which publishers first began framing the cost(aggregate framing). Subjects in the PAD condition re-of their subscriptions on a per-issue basis in the earlyquired a mean savings of $11.75 per monththe equiva-1980s. This change in strategy was motivated by severallent of $141 per year. In contrast, subjects in the aggregatewell-controlled, market-based studies that compared sub-condition required a mean savings of only $56 per year.scription response rates for solicitations that used per-This difference in compensation demanded was signifi-issue and per-year price framing.1 These studies revealedcant ( t(52) 3.04, p .005) and again was consistentper-issue framing to be 1040 percent more effectivewith PAD effectiveness in that the PAD framing appearedthan financially equivalent per-year framing at securingto reduce the perceived magnitude of the funds in ques-such subscriptions. These results have contributed to thetion.widespread adoption of per-issue price framing in the

subscription-magazine business over the past decade.Subscription Study. A third study described an annualPaul Price (1994) provides similar support for PAD

subscription offer for a weekly magazine. Fifty-three sub-effectiveness in his academic research. He asked subjects jects were asked to report either a fair per-issue priceto rate the probability that they would rent a more conve-(PAD framing) or a fair overall price (aggregate framing)niently located $650 apartment over a less convenientlyfor this annual subscription. The mean per-issue pricelocated $600 apartment. Some subjects were remindedconsidered fair was $1.47, for a yearly total of $76.25.that the weekly price difference between the two apart-The mean overall price considered fair was $38.65. Thisments was $11.54. Others were reminded that the yearlydifference was significant ( t(51) 3.92, p .0005) andprice difference was $600. In keeping with PAD effec-in general agreement with the magazine-industry studiestiveness, Price found the weekly reminder significantlyreported above.increased subjects likelihood of renting the more-expen-

Taken together, these industrial and laboratory studiessive apartment, while the yearly reminder decreased thatindicate that PAD strategies can affect consumer compli-likelihood.ance across a range of product categories. I will nowFinally, in the early stages of the present research, sup-attempt to establish a theoretical account for this PADport for PAD effectiveness was gained through a seriesphenomenon.of pilot studies in which subjects were presented with

familiar transaction scenarios with costs temporally ma-nipulated. A PAD framing was predicted to decrease the

PAD: A THEORETICAL FRAMEWORKperceived monetary magnitude of each transaction rela-tive to a more aggregate framing, thereby increasing the

Over the past several decades, marketing research hasattractiveness of transactions involving the payment ofshown that much of consumer choice is comparative infunds and decreasing the attractiveness of transactionsnature, with potential transactions evaluated relative toinvolving the reception of funds.other transactions that are judged to be similar in some

Donation Study. In one such study, 120 subjects were fashion (for an overview, see Payne, Bettman, and John-presented with a hypothetical donation request in which son [1993]) . This has been shown for choices betweenthey were asked to contribute to a worthy cause through comparable alternatives, as when selecting one brandcorporate payroll deductions. Half saw the request framed from a group of highly similar brands within a productas an ongoing contribution of 85 per day (PAD framing) category, and for choices between noncomparable alterna-and half saw it framed as a total contribution of $300 per tives, as when deciding whether to spend birthday moneyyear (aggregate framing). The use of payroll deductions on a new bicycle or a stereo system (Johnson 1984).made for financially equivalent donations across the two As noted by Lynch and Srull (1982), however, almostframes. The PAD framing was expected to decrease the all existing consumer-choice research can be classified asperceived magnitude of the request, thereby increasing stimulus based, with the entire range of alternativescompliance relative to the aggregate framing. As ex- available to the decision maker either physically presentpected, the percentage of subjects agreeing to donate was or described in detail. In contrast, much real-world con-significantly higher under the PAD than under the aggre- sumer decision making does not entail a well-defined setgate framing (52 vs. 30 percent; x 2(1) 4.66, p .05) . of alternatives (Lynch, Marmorstein, and Weigold 1988)

but, rather, a single alternative that must be either ac-cepted or rejected. I believe the processes that underliesuch single-alternative decision making form the basis for1Personal communication on March 22, 1995, with the Director of

Marketing, Time Inc. PAD effectiveness.



397PENNIES-A-DAY

derived from some pattern of features those members tendA Model of Single-Alternativeto share.Decision Making Schwarz and Bless (1992) offer similar thoughts whenthey state that individuals who are asked to form a judg-In their recent research, Nowlis and Simonson (1997)ment about some target stimulus first need to retrieveclaim that product attributes differ in the degree to whichsome cognitive representation of it. In addition, they needthey may be meaningfully evaluated in the absence ofto determine some standard of comparison to evaluate themultiple alternatives. They argue that certain attributes,stimulus (p. 218).such as brand quality, are context independent. Such attri-

For consumer transactions, the existence of categoriesbutes may be reliably assessed independent of the alterna-and the use of comparisons is no less important. Fortives considered. Other attributes, such as price, are ex-instance, Emery (1969) argues that consumers do nottremely context dependent. Evaluations of these attributes judge price in isolation but, rather, relative to similarare difficult and unreliable in the absence of availableproducts categorized on a price-versus-quality basis. Sim-alternatives.ilarly, Thaler (1985) claims that consumers group trans-Accepting the importance of context in the assessmentactions into budgetary categories or mental accountsof price, I propose the following two-step model to ex- (e.g., food, entertainment) and evaluate individual trans-plain PAD effectiveness. In step 1, when faced with aactions, as they arise, within the context of these mentalsingle-alternative transaction, consumers retrieve a cate-accounts.gory or class of comparable expenses for the purpose of

This categorization or comparison-retrieval processproviding context (see Fig. 1) . Rather than attempt tomay be contextually dependent (Barsalou 1982; Hender-trade off the utility and the price of the target transactionson and Peterson 1992). As noted by Schwarz and Blessin isolation, a task that grows increasingly difficult with (1992), individuals temporary representation of theones lack of familiarity with a product category, a con-target stimulus, as well as their construction of the stan-sumer will retrieve a set of seemingly similar expensesdard of comparison, includes information that is . . . tem-to serve as a standard of comparison.2porarily accessible due to contextual influencesIn step 2, the target transaction is critically evaluated (p. 218).in the context of this retrieved category of comparison

Applied to PAD, one such contextual influence may beexpenses. If the target transaction is judged to be similar,the manner in which the cost of a transaction is temporallyassimilation occurs, and the target transaction is acceptedframed. I believe that the PAD framing of a target transac-as a member of the retrieved category. If the target trans-tion will foster the retrieval of small ongoing expensesaction is judged to be sufficiently different from the re-as the standard of comparison and that an aggregate fram-trieved category, contrast occurs, and the target transac-ing of that same transaction will foster the retrieval oftion is rejected as a member of that category (for anlarge infrequent expenses. In the extreme, marketersoverview of the assimilation and contrast literature, seemight try to help consumers in this process by offeringSchwarz and Bless [1992]) .candidate comparisons. Jennifer Convertibles, for exam-To explain PAD effectiveness, I claim that the temporalple, has run ads in which it proclaims, If you can affordframing of price for a single-alternative transaction sys-this, while showing a bottle of Evian water, Then youtematically affects the nature of the expenses that a con-can afford this, while showing a luxury sofa bed pricedsumer retrieves for the purpose of comparison. In specific,at $1.50 per day. Similarly, Kelloggs claims that forI argue that a PAD framing will foster the retrieval ofless than the cost of a postage stamp, you can address asmall ongoing expenses as the standard of comparison,bowl of Kelloggs Corn Flakes. This predicted effect ofwhereas an aggregate framing will foster the retrieval oftemporal reframing on the retrieval of comparison ex-large infrequent expenses. This difference in retrieval ispenses is reflected in the following hypothesis:predicted to influence subsequent transaction evaluation

and compliance. This model is outlined in detail below. H1: The PAD framing of a transaction will lead tothe retrieval of small ongoing expenses as aStep 1: Comparison Retrieval. The process of catego- standard of comparison more readily than will

rization has been argued to be among the most basic of a financially equivalent aggregate framing.human processes (see, e.g., Mervis and Rosch 1981).Step 2: Transaction Evaluation. Following the re-According to Sujan (1985), people naturally divide the

trieval of a category of comparison expenses, a consumerworld of objects around them into categories, enablingis left to evaluate the target transaction in the context ofan efficient understanding and processing of the environ-those expenses. As suggested by Schwarz and Blessment (p. 31). These efficiencies result from expecta-(1992) and others (e.g., Herr 1986, 1989), one of twotions about members of a particular category that areprocesses may occur at this point. If the target transactionis judged to be sufficiently similar to the retrieved cate-gory of expenses, assimilation will occur and the target2For highly familiar, repeat-purchase types of product categories,transaction will be accepted as belonging to that category,memory-based choice may supplant the more constructive choice

processes proposed here. thereby taking on the general characteristics of the re-




FIGURE 1

A TWO-STEP MODEL OF SINGLE-ALTERNATIVE DECISION MAKING FOR TEMPORALLY FRAMED TRANSACTIONS

NOTE.It is predicted that category width will be greater for large infrequent expenses than for small ongoing expenses, leading to a greater likelihood ofassimilation for aggregate-framed transactions than for PAD-framed transactions.

trieved expenses. If, on the contrary, the target transaction overlap involves the width of the retrieved category. Themore narrowly a consumer defines a retrieved categoryis judged to be sufficiently different from the retrieved

category of expenses, contrast will occur and the target on some dimension, the less opportunity there is for cate-gory-stimulus overlap, and the less likely assimilation istransaction will be rejected as a member of that category.

As such, the general characteristics of the retrieved ex- to occur. Conversely, the more broadly a consumer de-fines a retrieved category on that dimension, the morepenses will not be transferred to the target transaction

but, rather, may be subtracted from the transaction likely assimilation is to occur.These concepts can now be applied to help explain(Schwarz and Bless 1992).

According to research, the likelihood that the target PAD effectiveness. Assume that step 1 of the proposedmodel leads to the systematic retrieval of comparisons astransaction will be assimilated or contrasted with the re-

trieved expenses should depend on the perceived overlap predicted, with a PAD frame fostering the retrieval ofsmall ongoing expenses, such as coffee and lottery tickets,of their salient features (Sujan 1985; Tversky 1977).

Rosch and Mervis (1975) refer to this as family resem- and an aggregate frame fostering the retrieval of largeinfrequent expenses, such as airline tickets and appli-blance. If the perceived overlap is high, assimilation

should occur. If it is low, contrast should occur. Schwarz ances. In step 2, consumers are left to evaluate the targettransaction in the context of these retrieved comparisons.and Bless (1992) argue that one key to perceived feature



399PENNIES-A-DAY

In one such evaluation, both the PAD and the aggregate large amounts. These expectations are captured in thefollowing two hypotheses:transactions may be judged as similar to their respective

retrieved comparisons, which results in assimilation andH2: At small daily dollar amounts, the PAD framingcategory inclusion in both cases. Therefore, the PAD

of a transaction will result in significantlytransaction takes on the characteristics of expenses such higher compliance than a financially equivalentas coffee and lottery ticketsexpenses typically thoughtaggregate framing.of as trivial, affordable, and out-of-pocket. Similarly, the

aggregate transaction takes on the characteristics of ex- H3: At larger daily dollar amounts, the effectivenesspenses such as airline tickets and appliancesexpenses of a PAD framing will decrease and possiblytypically thought of as significant and somewhat unaf- reverse, relative to a financially equivalent ag-fordable and that consumers generally look to avoid or gregate framing.delay. As a result, all else being equal, the PAD transac-

These hypotheses were tested in two studies designedtion should be perceived as a more attractive offering andto assess the causes and limitations of PAD effectiveness.lead to higher compliance than the financially equivalent

aggregate transaction.For example, consider a donation solicitation for $365. STUDY 1

When framed as a PAD request for $1 per day, it mayStudy 1 employed a charitable-donations scenario inbe viewed as highly consistent with a variety of small

which the temporal framing and the monetary magnitudeongoing expenses. And when framed as an aggregate re-of a charitable request were manipulated across subjects.quest for $365, it may be viewed as highly consistentStudy 1 was designed to address several issues. First, itwith a wide variety of large infrequent expenses. Givenwas designed to assess step 1 of the proposed two-stepthe relative palatability of the small as opposed to themodel by testing whether the temporal framing of a targetlarge expenses, however, the solicitation should be per-transaction would influence the nature of the expenses aceived as more attractive and lead to a higher level ofconsumer considered comparable (Hypothesis 1) . Sec-compliance under the PAD framing than under the aggre-ond, it was designed to assess step 2 of the proposedgate framing.model by testing for PAD effectiveness at small dailyThere may be a monetary upper limit to this PADdollar amounts (Hypothesis 2) and by testing whether thateffectiveness, however. As pointed out, the likelihood ofeffectiveness was moderated by the size of the monetaryassimilation versus contrast should depend on the widthrequest (Hypothesis 3) .of the retrieved category, with a wider category resulting

in a greater likelihood of assimilation than a more narrowcategory (Schwarz and Bless 1992). I believe category Methodwidth, here defined in terms of monetary magnitude, may

Subjects. Subjects in this study were part-time andbe more narrow for small ongoing expenses than for largeexecutive M.B.A. students at the University of Chicagoinfrequent expenses. As a result, while a low-cost transac-who received a survey through their campus mail folders.tion may result in assimilation under either an aggregateThey were motivated to participate by a $100 lottery forframing or a PAD framing, a high-cost transaction couldthose returning surveys. Of 975 surveys distributed, 124result in assimilation under an aggregate framing butwere returned for a 13 percent response rate. Althoughcould result in contrast under a PAD framing, whichoverall response mortality was high, a test for differentialwould cause the PAD strategy to backfire.mortality revealed no significant response rate differencesFor instance, now consider a donation solicitation foracross the various experimental conditions (x 2 1).$3,650 instead of $365. When framed as a PAD request

for $10 per day, this solicitation will likely be viewed as Stimuli and Design. One-paged surveys labeled Do-highly inconsistent with the small ongoing expenses one nations Questionnaire were used in this study, with eachhas retrieved, because of the relatively narrow category survey depicting a company-sponsored donation scenario.width for such expenses. This should result in contrast Subjects were asked to imagine that they were earningand a perception of extreme unaffordability. When framed $50,000, that their company was sponsoring a donationas an aggregate request for $3,650, however, it should drive to help the underprivileged in the United States,still be viewed as consistent with the large infrequent and that participation was optional and anonymous. Theyexpenses one has retrieved, because of the greater cate- were told that the requested donation would be pro-gory width for large expenses, and this should lead to rated and automatically deducted from their monthly pay-assimilation. As a result, at this higher monetary level, a checks, which thereby equated the timing of physicalPAD framing of the donation request may lead to lower payments across PAD and aggregate framings. The termtransaction compliance than a financially equivalent ag- pro-rated was defined to avoid misunderstandings ongregate framing. the part of the subjects.

Thus, while a PAD strategy may be more effective at Next, each subject was presented with one of sixspecific donation requests, prefaced with the phrasesmall daily dollar amounts, it may be less effective at




This Years Requested Donation Pledge. This re- such an experienced subject pool to be less susceptibleto the temporal framing manipulations employed here.quest was manipulated in a 2 1 3 between-subjects

design. The first factor was the temporal framing of the Comparison Retrieval. To assess the effects of tem-donation request ( frame) : subjects saw either a PAD- poral framing on the retrieval of comparison expensesframed request in the form of a daily donation or an (Hypothesis 1) , all subjects were asked to list three ex-aggregate-framed request in the form of a yearly dona- penditures that they felt were comparable to the donationtion. The second factor was the dollar amount of the

amount requested. Three independent raters categorizeddonation request ( request amount ) : $1, $4, or $7 pereach of these generated expenditures as either a smallday, under the PAD framings, or the approximate yearlyor a large expense. Small expenses were defined for

equivalents of $350, $1,400, or $2,500, under the ag- the raters as routinely encountered, petty-cash types ofgregate framings. The yearly amounts were roundedexpenditures. Small expenses commonly mentioned by

off and marginally lower than their respective dailysubjects included coffee, lunch, and taxi fare. Large ex-

amounts to avoid suspicious yearly requests and to penses were defined as infrequently encountered, majorslightly bias compliance away from the PAD frames.

expenditures. Commonly mentioned large expenses in-These dollar amounts were chosen to test the moder-cluded suits and vacations. Mean interrater reliability was

ating effect of request amount. A priori, I expected a high (r .84) , with disagreements settled by majorityPAD request for $1 per day to be perceived as highlyopinion.

consistent with small ongoing expenses and to lead to With the number of small expenses generated by eachassimilation. However, I expected PAD requests of $4

subject as the dependent measure, the effects of framingand $7 per day to be perceived as increasingly less

and monetary magnitude on the generation of these com-consistent with small ongoing expenses and to decrease parable expenses were analyzed in a 2 (frame) 1 3 (re-the probability of assimilation (or, conversely, to in- quest amount) ANOVA. Seven of 124 subjects failed tocrease the probability of contrast ) . Therefore, while I

report any expenditures and were eliminated from thisexpected PAD effectiveness at $1 /$350, I also expected

analysis.PAD effectiveness to become less and less positive (or In this analysis, frame proved to be the only significantmore and more negative ) as the request amount in-

variable (F(1, 111) 22.95, p .0001), with PADcreased to $4 /$1,400 and $7/$2,500.

subjects generating an average of 1.2 small comparisonsFollowing each request, several questions were posed.and aggregate subjects generating an average of 0.2 smallFirst, subjects were asked, What is the likelihood youcomparisons.

would agree to donate the amount requested? They were These results support the prediction that temporal fram-told to respond on an 11-point scale, anchored by not ing affects the nature of the expenses that a consumerat all likely at zero and extremely likely at 10. In

retrieves in response to a target transaction (Hypothesiskeeping with existing research (Dodds, Monroe, and 1). Here, when asked to retrieve expenditures that wereGrewal 1991; Grewal, Monroe, and Krishnan 1996), itcomparable, PAD subjects frequently retrieved small on-

was expected that likelihood of donation would corre- going expenses (55 percent retrieved one or more smalllate with subsequent behaviorin this case, donationexpenses) , and aggregate subjects almost exclusively re-

compliance. Next, subjects were asked, What expendi- trieved large expenses (only 10 percent retrieved one ortures do you feel are comparable to the donation amountmore small expenses) .

requested? List three. Finally, subjects were asked sev- Note that request amount had no significant effect oneral demographic questions, including their years of work the categorical nature of the comparisons retrieved, whichexperience and whether they had previously been exposed is consistent with step 1 of the proposed model. As perto a company-sponsored donation program.

step 1, subjects in the PAD conditions would have beenexpected to retrieve categorically similar expenses acrossProcedure. The six conditions used in this study wereeach of the three request amounts. In addition, subjectsnot evenly distributed across potential subjects. Under thein the aggregate conditions also would have been ex-assumption that the three PAD requests would producepected to retrieve categorically similar expenses acrossmore variable responses than would the three aggregatethe three request amounts. These retrieved expensesrequests, 200 copies of each of the PAD surveys andwould then have formed the standard of comparison inonly 125 copies of each of the aggregate surveys werestep 2 of their decision-making processes, with thedistributed, for a total of 975 surveys distributed. A totalamount of the request resulting in either assimilation andof 124 surveys was returned.perceived affordability or contrast and perceived unaf-fordability. This appears to have been the case.

ResultsTransaction Evaluation. To assess the effects of

framing and monetary magnitude on transaction evalua-Mean reported full-time work experience across allsubjects was 7.56 years, with 88.6 percent of subjects tion, subjects responses were also analyzed in a 2

(frame) 1 3 (request amount) ANOVA. Not surprising,reporting having been previously exposed to a corporate-sponsored donation program. A priori, one might expect request amount had a significant main effect on evalua-



401PENNIES-A-DAY

tion, with subjects more likely to comply with the dona- tive (or more and more negative) as request amount in-creased.tion request when the requested amount was low rather

than high (F(2, 118) 8.49, p .001). This expectation was only partially supported. The in-teraction contrast between frame and linear trend of re-This main effect was qualified, however, by a sig-quest amount proved significant (F(1, 118) 4.60, pnificant interaction between frame and request amount .05) , as expected. However, the interaction contrast(F (2, 118) 4.57, p .02) , as shown in Figure 2.between frame and quadratic trend of request amount alsoIn the $1 /$350 condition, the mean likelihood of dona-proved significant (F(1, 118) 4.31, p .05) , contrarytion was higher for subjects in the PAD condition thanto expectations. As shown in Figure 2, the cause for thisin the aggregate condition (XV PAD 4.83 vs. XV Aggregatesignificant quadratic trend can be traced to the fact that 3.16) . A planned contrast revealed this simple mainthe simple main effect for frame is greater at the $4/effect to be marginally significant (F ( 1, 118) 3.85,$1,400 level (F(1, 118) 4.56, p .05) than at thep .06) , which supports PAD effectiveness at small$7/$2,500 level (F(1, 118) 1.19, NS). Although thisdaily dollar amounts (Hypothesis 2) . At the same time,finding is a concern, it is possible that floor effects in thethe mean likelihood of donation was lower for subjectsresponse scale were responsible for this unexpected result.in the PAD as opposed to the aggregate conditions atNote that the mean donation likelihood in the $4-per-dayboth the $4 /$1,400 level (XV PAD 1.00 vs. XV Aggregatecondition was already at the low level of 1.00. If subjects 2.88; F ( 1, 118) 4.56, p .05) and the $7 /$2,500were reluctant to report a donation likelihood of zero, itlevel (XV PAD 1.23 vs. XV Aggregate 2.20; F (1, 118)would not be surprising to end up with comparable dona- 1.19, NS) .tion likelihoods across the $4-per-day and $7-per-dayThis significant omnibus interaction supports the mod-conditions.erating effect of request amount, as predicted in Hypothe-

sis 3. However, additional insight into this moderatingeffect can be gained through a frame 1 request amount Discussiontrends analysis. A priori, I would have expected to find

This first study provides support for step 1 of thea linear, but not a quadratic, interaction effect betweenproposed two-step decision-making model. It suggestsframe and request amount on likelihood of donation. Inthat the temporal framing of a transaction affects thespecific, within the monetary ranges tested, I would havetypes of expenses a consumer considers comparableexpected PAD effectiveness to become less and less posi-(Hypothesis 1) . Subjects who encountered a PAD re-quest were six times as likely to compare that requestto small ongoing expenses than were subjects who en-

FIGURE 2 countered an aggregate request. However, given thatsubjects were asked to generate comparisons after theyEFFECTS OF TEMPORAL FRAME AND REQUEST AMOUNTreported their likelihood of donation, it is not clearON THE LIKELIHOOD OF DONATION: STUDY 1that consumers naturally considered such comparisonsduring their decision-making processes. It is possiblethat the comparisons generated in this study weremerely an experimental demand effect. This concern isaddressed in study 2.

Study 1 also provides support for step 2 of the proposedmodel. Consistent with the evaluation processes of assim-ilation and contrast, a PAD strategy increased subjectsmean donation likelihoods at the $1/$350 level but de-creased their donation likelihoods at the $4/$1,400 and$7/$2,500 levels. Therefore, it appears that a PAD strat-egy can increase transaction compliance (Hypothesis 2)but that this effectiveness is limited by the monetary sizeof the target transaction (Hypothesis 3) .

In addition to supporting the hypotheses put forth,study 1 also provides evidence against several alternativeexplanations for PAD effectiveness. First, one could arguethat consumers systematically view donations in terms ofthe benefits they receive (e.g., satisfaction), as opposedto the costs they incur. If so, they may prefer to psycho-logically segregate their contributions into a long seriesof daily donations, as suggested by Thaler (1985). If thishad been the case, however, the PAD framings shouldNOTE.Mean likelihoods of donation are shown in bold. Numbers of re-

sponses are shown in parentheses. have been more effective than the aggregate framing




across all three request amounts. Given the reversal of general prediction of price sensitivity, in which consum-ers will be significantly influenced by the prices of ex-PAD effectiveness at $4 and $7 per day, this explanation

can be rejected.3 penses that are congruent with a temporal framing butunaffected by the prices of expenses that are incongruentSecond, it is possible that PAD strategies are effective

because individuals fail to recognize the yearly implica- with that framing. For a PAD transaction, small ongoingexpenses would be considered congruent with the PADtions of PAD requests and systematically underestimate

the cumulative expense. Given this explanation, one framing, and large expenses would be considered incon-gruent. And for an aggregate transaction, large infrequentwould again expect the PAD framing to be more effective

across all three dollar amounts. Given that this was not expenses would be considered congruent with the aggre-gate framing, and small expenses incongruent. This morethe case, this explanation is inadequate to explain PAD

effectiveness. general pattern of price sensitivity is reflected in the fol-lowing hypothesis:Third, one might claim that PAD strategies are effec-

tive because individuals mistakenly discount the cash H4: For a temporally framed transaction, a consum-flows under the various PAD framings. Given psycho-ers evaluation of that transaction will be influ-logical discount rates that typically are far in excess ofenced by expenses that are congruent with thefinancial discount rates (Loewenstein and Prelec 1992;temporal framing but unaffected by expensesThaler 1981) , this would cause the PAD requests to bethat are incongruent with the framing.far more palatable than the equivalent aggregate re-

quests. Again, however, this explanation would imply In an attempt to demonstrate this frame-dependent pricePAD effectiveness across all three donation levels, sensitivity, in study 2 the cost of a target transaction waswhich was not found. held constant and the prices of potential small and large

comparisons were manipulated. In specific, this study de-scribed a fictional foreign country with an unfamiliarSTUDY 2currency (i.e., the Gern) . Subjects were asked to com-ment on the generosity of a friend who had made a Gern-Study 1 provided general support for the proposed two-based donation that was quoted either as a daily contribu-step decision-making process of comparison retrievaltion (PAD framing) or a yearly contribution (aggregate(step 1) and transaction evaluation (step 2). However,framing).given that subjects were asked to generate comparisons

To aid in their assessment of generosity, subjects werein the first study, step 1 of the proposed model requiresprovided with the prices of several small ongoing ex-further attention. Therefore, study 2 was designed spe-penses (e.g., coffee) and several large infrequent ex-cifically to test for step 1 of the proposed two-step pro-penses (e.g., a business suit) . By holding constant thecess.amount being donated and independently manipulatingAccording to the proposed model, when faced with athe prices of these small and large expenses, I hoped toPAD transaction, consumers retrieve small ongoing ex-determine which comparisons subjects employed whenpenses as the standard of comparison. If true, one wouldjudging donation generosity.expect a consumers evaluation of a PAD transaction to

It should be noted that, in contrast to study 1, thisbe significantly influenced by the prices of those smallsecond study was primarily theoretical in nature. I wasexpenses. If the PAD transaction compares favorably oninterested in the comparisons retrieved and used by anprice relative to those small expenses, assimilation shouldindividual to make a judgment about a temporally framedbe more likely to occur, and compliance should be highertransaction. As such, while there may be some questionthan if the transaction compares unfavorably. One wouldas to the strength of correlation between generosity ofalso expect a consumers evaluation of that PAD transac-a friend and transaction compliance, the choice oftion to be unaffected by the prices of large infrequentthis dependent measure was felt to be appropriate to testexpenses, as consumers should tend not to retrieve suchstep 1 of the proposed two-step process. In addition, aexpenses for the purpose of comparison.friend was chosen as the point of reference, as opposedConversely, when faced with an aggregate transaction,to the subjects themselves, to justify the foreign-countrythe model suggests that consumers retrieve large infre-scenario and to avoid idiosyncratic responses (e.g., Iquent expenses. Following the same logic as above, theironly donate to my church) .evaluation of such a transaction should be significantly

affected by the prices of those large expenses but unaf-fected by the prices of small ongoing expenses. Method

These two predictions can be combined to form a moreSubjects. Subjects for this study were full-time

M.B.A. students from the University of Chicago whoreceived surveys through their campus mail folders. They3However, consistent with a more complex application of Thalerswere motivated to participate by a $100 lottery for thoseframework (1985), it is possible that consumers view small donationsreturning surveys. Of 1,100 surveys distributed, 172 werein terms of benefits ( leading to a desire for segregation) but large

donations in terms of costs ( leading to a desire for integration). returned for a 15.6 percent response rate. While overall



403PENNIES-A-DAY

response mortality was again high, a test for differential The third factor was the relative prices of the threelarge expenses each subject saw (size of large expenses) .mortality revealed no significant response rate differences

across experimental conditions (x 2(7) 4.93, p .60) . Again, subjects were presented with prices that were ei-ther comparatively low (i.e., suit 2,000 Gerns, cameraStimuli and Design. As in study 1, a donation setting 2,500 Gerns, rent 5,000 Gerns) or comparatively

was employed. Surveys were one-page documents in high (i.e., suit 6,000 Gerns, camera 7,500 Gerns,which subjects were presented with the following sce-

rent 15,000 Gerns) .nario: These second and third factors were manipulated inde-

pendently, forming four different sets of backgroundImagine that you are having a telephone conversationwith a friend who lives and works in a foreign country. prices for the small and large expenses. Each subject sawThe currency in this foreign country is the Gern. You only one of these four sets of background prices: (1) low/are not familiar with this currency. low, (2) low/high, (3) high/low, or (4) high/high.

In passing, your friend mentions that for the past severalyears, he has been donating money to a public television Dependent Variables. After reading their respectivestation in his adopted country. He describes the station in donation scenario, each subject was asked several ques-much the same way that someone might describe a public tions. The primary dependent variable for this study wastelevision station in the United States. a subjects rating of their friends generosity. Subjects

Being curious, you ask how much he donates. He tells were asked, How generous would you consider youryou that the public television station has several pledge friends donation pledge? and were provided with an 11-levels. This year his pledge level is [10 Gerns per day/ point response scale anchored by not at all generous at3,500 Gerns] , payable in monthly installments.1 and extremely generous at 11. In addition, subjectsTo put this donation in perspective, you ask your friendwere asked, What do you think is the Dollar to Gernabout the average prices for some common expenses. Yourexchange rate in this country? $1 (U.S.) Gernsfriend reports the following prices:and were instructed to fill in the blank. Finally, to assess

Each subject was then shown six expenses that were their understanding of the stimuli, subjects in the PADpriced in the local currency of Gerns. These expenses conditions were asked to report the total yearly amountconsisted of three small ongoing expenses (i.e., daily being donated, while subjects in the aggregate conditionsnewspaper, cup of coffee, lunch) and three large expenses were asked to report the approximate daily amount being(i.e., business suit, 35-mm camera, monthly rent) . The donated.order of presentation for these items was counterbalancedacross subjects.4 ResultsWith this scenario as a foundation, a 2 1 2 1 2 be-tween-subjects manipulation was employed. The indepen- Five of 172 returned surveys were eliminated from thisdent factors were (1) the temporal frame of the donation study, either for failure to respond to all of the questionspledge, (2) the relative prices of the small expenses, and (one survey) or for obvious errors in calculating the daily(3) the relative prices of the large expenses. implications of the aggregate donation pledge (four sur-

The first factor manipulated was the frame of the annual veys) . All reported analyses were conducted on the re-donation pledge (frame). Half the subjects saw the dona- maining 167 surveys.tion pledge framed as a daily expense of 10 Gerns per

Generosity Ratings. Mean generosity ratings acrossday (PAD framing). The other half saw the donationthe eight conditions are shown in Table 1. In consideringpledge framed as a yearly expense of 3,500 Gernsthese results, it should be noted that subjects almost exclu-(aggregate framing). These pledge amounts were chosensively used the upper portion of the 11-point responseso as to minimize the cognitive effort required to considerscale. Fewer than 10 percent of subjects rated theirthe yearly implications of the PAD pledge or the dailyfriends generosity less than 6, and nobody rated it lessimplications of the aggregate pledge. Also, given thethan 4.monthly payment schedule outlined in the scenario, these

With subjects generosity ratings as the dependent vari-amounts represented almost identical physical payments.able, I tested whether subjects were systemactically sensi-The second factor was the relative prices of the threetive to changes in the prices of expenses that were congru-small ongoing expenses that each subject saw (size ofent with, as opposed to incongruent with, the temporalsmall expenses) . Subjects were presented with prices thatframe of the target transaction (Hypothesis 4) . To test thiswere either comparatively low (i.e., newspaper 3hypothesis, the 2 (frame) 1 2 (size of small expenses)Gerns, coffee 6 Gerns, lunch 30 Gerns) or compara- 1 2 (size of large expenses) design was rearranged totively high (i.e., newspaper 9 Gerns, coffee 18 Gerns,form a 2 (frame) 1 2 (size of congruent expenses) 1 2lunch 90 Gerns) .(size of incongruent expenses) design. In specific, for thePAD conditions, size of small expenses was recoded assize of congruent expenses, and size of large expenses4In addition to counterbalancing, I checked for order effects in allwas recoded as size of incongruent expenses. For theanalyses. Order of presentation was not significant in any analysis as

either a main effect or interaction (all ps .10) . aggregate conditions, size of large expenses was recoded




TABLE 1

MEAN GENEROSITY RATINGS AND EXCHANGE-RATE ESTIMATES BY TEMPORAL FRAMEAND SIZE OF BACKGROUND EXPENSES: STUDY 2

PAD framing Aggregate framing

Low small expenses High small expenses Low small expenses High small expenses

Low High Low High Low High Low Highlarge large large large large large large large

expenses expenses expenses expenses expenses expenses expenses expenses

Generosity of friend 8.64 8.22 7.00 7.12 8.78 7.46 8.52 7.74(25) (23) (22) (20) (18) (13) (23) (23)

Exchange rate 8.14 11.50 16.69 20.16 8.09 11.38 13.93 19.42(25) (23) (25) (20) (18) (13) (23) (23)

NOTE.Number of observations is in parentheses.

as congruent, and size of small expenses was recoded as greater impact on exchange rates for subjects in the PADconditions (XV Congruent-low 9.7 vs. XV Congruent-high 18.3)incongruent.

This new design was then analyzed in a 2 1 2 1 2 than for those in the aggregate conditions (XV Congruent-low 11.3 vs. XV Congruent-high 16.5) .ANOVA, which revealed no main effect for frame (F(1,

159) 1.75, p .18) , a significant main effect for size These results were in sharp contrast to those for sub-jects generosity ratings. Whereas subjects explicitly con-of congruent expenses (F(1, 159) 17.74, p .0001),

and no main effect for size of incongruent expenses (F sidered both the size of congruent and the size of incon-gruent expenses when estimating an exchange rate, they 1). In addition, no higher-order interaction proved sig-considered only the size of congruent expenses when as-nificant (all ps .30) .sessing generosity. And whereas frame appeared to haveAs can be seen in Figure 3, subjects in both the PAD-a significant impact on exchange-rate estimates, as evi-and aggregate-framing conditions were quite sensitive todenced by the interaction between frame and congruentchanges in the price of expenses that were congruent withexpense, it had no impact on generosity. Therefore, ittheir frame but not at all sensitive to the changes in theappears that subjects were perfectly capable of using allprices of expenses that were incongruent. In specific, inof the information provided, as indicated by their ex-the PAD condition, a subjects rating of their friendschange-rate estimates, but spontaneously used only a por-generosity was affected by the changes in prices of smalltion of that information in their assessment of the generos-ongoing expenses but not by the changes in prices ofity of a temporally framed donation pledge.large expenses. And in the aggregate condition, subjects

To further confirm this premise, a test of mediation wasratings were sensitive to changes in the prices of largeconducted in the manner suggested by Baron and Kennybut not small expenses. Finally, this pattern of price sensi-(1986). On the basis of four regression analyses, reportedtivity was not frame dependent, as evidenced by the lackin Figure 4, I found (1) a significant effect of congruentof significance for any effect involving frame.expense (p .0001), incongruent expense (p .0001),

Exchange-Rate Evaluations. In addition to rating and frame 1 congruent expense (p .05) on exchangetheir friends generosity, subjects were asked for the likely rate; (2) a significant effect of exchange rate (p .0002)dollar-to-Gern exchange rate in the foreign country. Mean on generosity; (3) a significant main effect of congruentresponses across the various experimental conditions are expense (p .0001) on generosity; and (4) a significantalso shown in Table 1. main effect of congruent expense (p .0054) on generosity

With reported exchange rates as the dependent variable, even after the effect of exchange rate (p .0222) on gener-the 2 (frame) 1 2 (size of small expenses) 1 2 (size of osity was partialed out. This final regression indicates thatlarge expenses) design was again rearranged and analyzed while exchange rate may partially mediate the effect ofin a 2 (frame) 1 2 (size of congruent expenses) 1 2 congruent expense on generosity, it in no way eliminates(size of incongruent expenses) ANOVA. This analysis that effect. Thus, even after accounting for the potentialrevealed a significant main effect for both size of congru- mediating effect of perceived exchange rates, strong sup-ent expenses (F(1, 159) 40.71, p .0001) and size port was gained for the differential price sensitivity sug-of incongruent expenses (F(1, 159) 25.85, p .0001). gested in Hypothesis 4.And although the main effect of frame was not significant

Discussion(F 1), the interaction between frame and size of con-gruent expenses was (F(1, 159) 4.28, p .05) . It There are two main findings from this second study.

First, this study supports step 1 of the proposed decision-appears that size of congruent expenses had a significantly



405PENNIES-A-DAY

FIGURE 3

EFFECTS OF TEMPORAL FRAME AND SIZE OF BACKGROUND EXPENSES ON RATINGS OF GENEROSITY: STUDY 2

NOTE.Within the PAD condition, congruent expenses were small expenses (e.g., coffee) , and incongruent expenses were large expenses (e.g., rent ) . Withinthe aggregate condition, congruent expenses were large expenses, and incongruent expenses were small expenses.

making model. It appears that consumers differentially general support for PAD effectiveness and specific sup-port for the two-step model. In three pilot studies, it wasretrieve and use comparable expenses to evaluate transac-

tions on the basis of the temporal framing of those transac- shown that PAD framing could decrease the perceivedmonetary magnitude of a consumer transaction relativetions (Hypothesis 4) . Those subjects faced with a PAD

donation pledge systematically evaluated their friends to a more aggregate framing, thereby affecting the attrac-tiveness of the proposed transaction. In study 1, PADgenerosity in the context of small ongoing expenses as

opposed to large infrequent expenses. And those subjects effectiveness at small daily dollar amounts, as well as thepresence of a monetary threshold for that effectiveness,faced with an aggregate donation pledge systematically

evaluated their friends generosity in the context of the was demonstrated. Study 2 provided evidence that thiseffectiveness is tied to the nature of the expenses a con-large as opposed to small expenses.

Second, as evidenced by their calculations of exchange sumer retrieves for the purpose of comparison. Theseresults are all consistent with the two-step model.rates, it appears that subjects were fully capable of consid-

ering all of the comparison expenses provided. However, In addition, this research challenges several potentialcompeting explanations for PAD effectiveness. Mostwhen rating their friends generosity, they considered

only a subset of those expenses. Therefore, it appears prominently, the reversal of PAD effectiveness at largedaily dollar amounts challenges explanations that hingethat the framing of the donation pledge significantly and

systematically affected the comparisons subjects chose to on temporal discounting or the systematic miscalculationof the aggregate effect of a daily expense.consider in their assessment of their friends generosity.

In total, these results provide evidence that PAD strate-gies can be effective, that this effectiveness is tied to anCONCLUSIONS AND MANAGERIALunderlying process of comparison retrieval and transac-IMPLICATIONS tion evaluation, and that this process leads to a systematicand predictable monetary boundary to PAD effectiveness.To increase transaction compliance across a wide vari-

ety of products, marketers sometimes frame product costsas only pennies-a-day. To explain the effectiveness of Managerial Implicationsthis strategy, I have proposed a two-step model of con-sumer decision making that consists of (1) comparison Price Promotion. On the basis of the present research,

it appears that firms can influence consumer evaluations byretrieval and (2) transaction evaluation.In a series of pilot studies and main studies across a temporally reframing the price of goods and services. From a

strategic perspective, this reframing could serve two distinctvariety of product categories, this research has provided




FIGURE 4

MEDIATING EFFECT OF EXCHANGE RATE ON RATINGS OF GENEROSITY: STUDY 2

NOTE.Only factors with significant regression coefficients are reported in this figure. Numbers above the lines indicate regression coefficients and p-valuesfor those variables directly connected by the arrows. Numbers in brackets below the lines indicate regression coefficients and p-values for the specific case inwhich ratings of donation generosity is regressed against the independent factors and reported exchange rate.

purposes. First, a PAD strategy could be effective at increas- tageous to aggregate over time and view such behaviorsin terms of their long-term financial implications. Foring primary demand for a product (or product category) by

making that product seem more affordable. This seems to instance, a person wishing to quit smoking might be moremotivated to do so if they view their habit as costingbe the strategy of Jennifer Convertibles, who tells us that a

new living-room set costs only $1.50 per day. Their PAD $1,000 a year rather than $3 a day.Conversely, consumers could use price reframing toclaim focuses on the absolute price of a sofa bed, high-

lighting its surprising affordability. promote the consumption of virtuous products, such asvitamins, health insurance, and smoke detectors, whichIn contrast, temporal framing could be effective at de-

fending or stealing market share within a highly competi- might have high up-front costs (see Wertenbroch 1994).By focusing on the low per-usage costs of these products,tive product category. Consider the advertising of the

long-distance telephone-service providers AT&T and as opposed to their high aggregate costs, a consumer mayperceive them to be more affordable and be motivated toMCI, for example. In an attempt to retain existing custom-

ers and win back lost customers, AT&T trivializes the consume them at an increased rate.savings offered by MCI by disaggregating to the level of Cost Communication. A third domain of applicabilitypennies-per-minute. MCI, on the contrary, has chosen to for price framing is in the area of cost communication.magnify those same savings by aggregating the billions Organizations and individuals, public and private, are of-of dollars all consumers have cumulatively saved by ten responsible for disclosing monetary information to theswitching to MCI. Thus, the same monetary savings can general public (e.g., corporate earnings, social programbe framed as either pennies-per-minute, to defend market

costs) . This research indicates that the manner in whichshare, or as many billions of dollars, to steal market share.

such monetary information is presented could signifi-cantly affect ones perception of that information. ForBuying Behavior and Consumer Self-Control. The

temporal reframing of price may also be useful in modi- instance, in 1995 the federal government debated whetherto cut funding for the National Endowment for the Arts.fying habitualized buying behaviors, especially the ongo-

ing daily purchase of potential vices such as cigarettes, Proponents of the cuts framed the potential budgetarysavings as $168 million per year, while opponents of thesoft drinks, and lottery tickets (see Thaler 1980; Werten-

broch 1994). Consumers often justify these purchases as cuts framed those same savings as only 64 per citizen.5As one is assessing the efficacy of such a funding cut,merely pennies-a-day expenses, thereby contributing

to their overconsumption. Price reframing could be proac-tively employed by these consumers to overcome suchconsumption behavior. Rather than view ones habits as 5See What Price Art? The NEA Faces Its Greatest Threat Ever,

Chicago Tribune, April 16, 1995, sec. 13, p. 5.merely pennies-a-day, it may be motivationally advan-



407PENNIES-A-DAY

Dodds, William B., Kent B. Monroe, and Dhruv Grewalthese two framings could lead to substantially different(1991), Effects of Price, Brand, and Store Informationconclusions.on Buyers Product Evaluations, Journal of MarketingResearch, 28 (August) , 307319.

Emery, Fred (1969), Some Psychological Aspects of Price,Future Researchin Pricing Strategy, ed. Bernard Taylor and Gordon Wills,London: Staples, 98111.The present research attempted to answer the question

Grewal, Dhruv, Kent B. Monroe, and R. Krishnan (1996),of why PAD strategies are effective. Several issues de-The Effects of Price Comparison Advertising on Buyersserve further attention, however. First, study 1 identifiedPerceptions of Acquisition Value and Transaction Value,monetary magnitude as one factor that moderates PADMarketing Science Institute Report No. 96-103, Cam-effectiveness. Future research should explore additional bridge, MA 02138.factors that may moderate or mediate this effectiveness. Henderson, Pamela W. and Robert A. Peterson (1992), Men-Preliminary research in this direction suggests that the tal Accounting and Categorization, Organizational Be-

natural rate of product consumption is one such factor. havior and Human Decision Processes, 51 (February) ,In specific, it appears that PAD strategies may be more 92117.effective when used to promote products that are con- Herr, Paul M. (1986), Consequences of Priming: Judgmentsumed on an ongoing basis (e.g., a health-club member- and Behavior, Journal of Personality and Social Psychol-

ogy, 51 (December) , 11061115.ship) than when used to promote products consumed in(1989), Priming Price: Prior Knowledge and Contexta lump-sum manner (e.g., a weekend vacation). A second

Effects, Journal of Consumer Research, 16 (June), 67factor that may influence PAD effectiveness is a consum-75.ers familiarity with prices within a product category.

Johnson, Michael D. (1984), Consumer Choice StrategiesConsumers who are more familiar with prices (e.g., ex-for Comparing Noncomparable Alternatives, Journal ofperts) may be less susceptible to temporal reframing than Consumer Research, 11 (December) , 741753.

consumers who are less familiar (e.g., first-time buyers) . Kahneman, Daniel and Amos Tversky (1979), Prospect The-Finally, I believe that PAD effectiveness may be affected ory: An Analysis of Decision under Risk, Econometrica,by the strength with which a product category is tied to 47 (March), 363391.a single form of payment. For instance, framing the rent Loewenstein, George and Drazen Prelec (1992), Anomaliesof an apartment as $30 per day may be ineffective because in Intertemporal Choice: Evidence and an Interpretation,of the strength with which apartment rents are identified in Choice over Time, ed. George Loewenstein and Jon

Elster, New York: Russell Sage, 119145.with monthly payments. In contrast, framing a magazineLynch, John G., Jr., Howard Marmorstein, and Michael F. Wei-subscription as only $1.50 per issue may be effective

gold (1988), Choices from Sets including Rememberedbecause of the wide variety of payment schedules usedBrands: Use of Recalled Attributes and Prior Overall Eval-for magazines.uations, Journal of Consumer Research, 15 (September) ,A second issue that would be interesting to investigate 169184.is the cumulative effects of PAD pricing strategies over

and Thomas K. Srull (1982), Memory and Attentiontime. Currently, PAD claims represent a very small per- Factors in Consumer Choice: Concepts and Researchcentage of the pricing claims that any given consumer Methods, Journal of Consumer Research, 9 (June), 18encounters. If the frequency of PAD claims were to in- 37.crease significantly, however, consumers might become Mervis, Carolyn B. and Eleanor Rosch (1981), Categorizationincreasingly immune to their influences. Therefore, al- of Natural Objects, Annual Review of Psychology, 32,though PAD strategies may be effective in certain situa- 82115.

Nowlis, Stephen M. and Itamar Simonson (1997), Attribute-tions, their continued effectiveness may lie in their sparingTask Compatibility as a Determinant of Consumer Prefer-employment.ence Reversals, Journal of Marketing Research, 34(May), 205218.

Payne, John W., James R. Bettman, and Eric J. Johnson (1993),[Received September 1995. Revised March 1997. BrianThe Adaptive Decision Maker, Cambridge: CambridgeSternthal served as editor and John G. Lynch, Jr.,University Press.served as associate editor for this article.]

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Pennies a Day