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Small probabilistic discounts stimulate spending: Pain of paying in price promotions

Publication ,  Journal Article
Lee, CY; Morewedge, CK; Hochman, G; Ariely, D
Published in: Journal of the Association for Consumer Research
April 1, 2019

We find that small probabilistic price promotions effectively stimulate demand, even more so than comparable fixed price promotions (e.g., “1% chance it’s free” vs. “1% off,” respectively), because they more effectively reduce the pain of paying. In three field experiments at a grocer, we exogenously and endogenously manipulated the salience of pain of paying via elicitation timing (e.g., at entrance or checkout) and payment method (i.e., cash/debit cards or credit cards). This modulated the attractiveness of probabilistic discounts and their ability to stimulate spending. Shoppers paying with cash or debit cards, for example, spent 54% more if they received a 1% probabilistic discount than a 1% fixed discount (experiment 2). A fourth experiment showed that consumers’ sensitivity to pain of paying modulates the greater comparative efficacy of small probabilistic than fixed discounts. More broadly, the results elucidate a novel affective route through which price promotions stimulate demand-pain of paying.

Duke Scholars

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Published In

Journal of the Association for Consumer Research

DOI

EISSN

2378-1823

ISSN

2378-1815

Publication Date

April 1, 2019

Volume

4

Issue

2

Start / End Page

160 / 171

Related Subject Headings

  • 3506 Marketing
  • 1503 Business and Management
 

Citation

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Lee, C. Y., Morewedge, C. K., Hochman, G., & Ariely, D. (2019). Small probabilistic discounts stimulate spending: Pain of paying in price promotions. Journal of the Association for Consumer Research, 4(2), 160–171. https://doi.org/10.1086/701901
Lee, C. Y., C. K. Morewedge, G. Hochman, and D. Ariely. “Small probabilistic discounts stimulate spending: Pain of paying in price promotions.” Journal of the Association for Consumer Research 4, no. 2 (April 1, 2019): 160–71. https://doi.org/10.1086/701901.
Lee CY, Morewedge CK, Hochman G, Ariely D. Small probabilistic discounts stimulate spending: Pain of paying in price promotions. Journal of the Association for Consumer Research. 2019 Apr 1;4(2):160–71.
Lee, C. Y., et al. “Small probabilistic discounts stimulate spending: Pain of paying in price promotions.” Journal of the Association for Consumer Research, vol. 4, no. 2, Apr. 2019, pp. 160–71. Scopus, doi:10.1086/701901.
Lee CY, Morewedge CK, Hochman G, Ariely D. Small probabilistic discounts stimulate spending: Pain of paying in price promotions. Journal of the Association for Consumer Research. 2019 Apr 1;4(2):160–171.
Journal cover image

Published In

Journal of the Association for Consumer Research

DOI

EISSN

2378-1823

ISSN

2378-1815

Publication Date

April 1, 2019

Volume

4

Issue

2

Start / End Page

160 / 171

Related Subject Headings

  • 3506 Marketing
  • 1503 Business and Management