DECIDING WHETHER TO SEEK A BARGAIN - EFFECTS OF BOTH AMOUNT AND PERCENTAGE OFF

Two experiments indicate that both the amount of money and the percentage of the base price that can be saved affect consumers' decisions about whether or not to exert extra effort to save money. The first study involved only small percentage savings, and subjects tended to say they would make the effort only when the amount saved was large; percentage off played no role. In the second study, with a greater range of percentages that could be saved, both amount and percentage off affected the decision. This contrasts with suggestions (D. Kahneman and A. Tversky, 1979, 1984) from prospect theory that only the percentage that can be saved (the topical frame) affects these decisions. It is suggested, however, that the present results are not inconsistent with prospect theory as long as one recognizes that consumers can and do frame their decisions at several levels.