Why 100 cents feels worth more than a dollar for someJanuary 22nd, 2009 - 2:07 pm ICT by ANI
Washington, Jan 22 (ANI): Although one dollar is made up of 100 cents, some people may behave as if 100 cents actually has more value, according to a new study.
This is because some people may pay more attention to the size of the numbers involved than the actual economic value.
“In some cases, money may just serve as a score - the higher number wins, regardless of the actual value,” said John Opfer, co-author of the study and assistant professor of psychology at Ohio State University.
One possible explanation for this may be that economic rewards don”t necessarily affect behaviour because of their economic value. Sometimes, it’’s the numeric value of economic rewards that makes the difference.
That’’s why people are more impressed by 100 cents than they are with 1 dollar, because 100 is larger than 1.
During the study, the team led by Opfer used a version of an often-used game in psychology, called the prisoner’’s dilemma.
In this version, two players had to decide separately and privately whether they were going to cooperate with each other or defect against their partner in exchange for a monetary reward.
If they both privately said they would cooperate, they both earned 3 dollars. If just one decided to defect, he earned 5 dollars while the other person earned nothing. If they both chose to defect, they both earned only 1 dollar.
The researchers had 48 college students play the prisoner’’s dilemma game. Some pairs could earn $3 for mutual cooperation, while others would earn 300 cents. They played the game 80 times in a row.
The study showed that the students who played for 300 cents cooperated more often than those who played for 3 dollars - even though both groups were playing for the same economic reward.
That means that those students playing for 300 cents acted as if they had more at stake than did those who were playing for 3 dollars.
“People were keeping track of the numbers, and not necessarily the values that were at stake,” Opfer said.
In another study, the researchers found that players cooperated a similar number of times whether they were playing for 300 dollars or 300 cents, even though the economic values are obviously extremely different.
They also cooperated a similar amount of times for $3 as they would for 3 cents - but there were fewer instances of cooperation here than there were for 300 dollars or 300 cents.
“It shows that the effects of dollars or cents is minimal when people are deciding whether to cooperate- all that matters is whether you”re playing for a “3″ or a “300,” Opfer said.
“The incentive to cooperate isn”t really an economic incentive. It is a confusability about numbers.”
The fact that large numbers easily impresses people has many real-world implications. (ANI)
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Tags: assistant professor, co author, college students, dilemma game, economic rewards, economic value, monetary reward, money, mutual cooperation, numeric value, ohio state university, opfer, pairs, psychology, score, stake