No matter if we are in the supermarket or shopping online: Every day we are manipulated by strategies from sales and price psychology. Extensive research has shown how we are seduced into buying by different price presentations. Not only the well-known nine prices play a central role, but we are also influenced by the color and the relative size of the price presentation. As is so often the case, those who know the marketing strategies can more easily protect themselves from them.

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Studies (small sample only):

Coulter, K. S., & Coulter, R. A. (2005). Size does matter: The effects of magnitude representation congruency on price perceptions and purchase likelihood. Journal of Consumer Psychology, 15(1), 64-76.

Felser, G. (2015). Werbe-und Konsumentenpsychologie. Springer-Verlag: Berlin.

Puccinelli, N. M., Chandrashekaran, R., Grewal, D., & Suri, R. (2013). Are men seduced by red? The effect of red versus black prices on price perceptions. Journal of Retailing, 89(2), 115-125.

Schindler, R. M., & Kibarian, T. M. (1996). Increased consumer sales response though use of 99-ending prices. Journal of Retailing, 72(2), 187-199.

Thomas, M., & Morwitz, V. (2005). Penny wise and pound foolish: the left-digit effect in price cognition. Journal of Consumer Research, 32(1), 54-64.

Thomas, M., Simon, D. H., & Kadiyali, V. (2007). Do consumers perceive precise prices to be lower than round prices? Evidence from laboratory and market data. Evidence from Laboratory and Market Data (September 2007). Johnson School at Cornell University Research Paper, (09-07).

Van Droogenbroeck, E., Van Hove, L., & Cordemans, S. (2018). Do red prices also work online?: An extension of Puccinelli et al.(2013). Color Research & Application, 43(1), 110-113.

Wu, C., & Cosguner, K. (2020). Profiting from the decoy effect: A case study of an online diamond retailer. Marketing Science, 39(5), 974-995.

Xiao, Q., Zeng, S., & Feldman, G. (2020). Revisiting the decoy effect: replication and extension of Ariely and Wallsten (1995) and Connolly, Reb, and Kausel (2013)‎. Comprehensive Results in Social Psychology, 4(2), 164-198.

Yang, S. S., Kimes, S. E., & Sessarego, M. M. (2009). Menu price presentation influences on consumer purchase behavior in restaurants. International Journal of Hospitality Management, 28(1), 157-160.

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Definition “psychology of pricing” – what is it? 

The psychology of pricing refers to the study of how people perceive and respond to different prices for goods and services. It involves understanding the psychological factors that influence people’s decisions to purchase or not purchase a product, as well as the ways in which prices can be used to influence people’s perceptions and behaviors.

One example of the psychology of pricing is the concept of “anchoring,” which refers to the tendency for people to rely on initial information as a reference point when making decisions. For example, if a person sees a product for sale at a high price, they may perceive it as being of higher quality or value, even if similar products are available at lower prices. This can lead people to pay more for a product than they otherwise might, simply because they are anchored to the initial high price.

Is personality irrelevant? – The Big Five and Career Success (Psychology, Personnel Selection, Business Psychology, Recruitment)

More than 100 years of research have impressively shown: Based on the Big Five personality factors, career success can be predicted surprisingly poorly on average (Schmidt, Oh & Shaffer, 2016). For example, a huge meta-analysis showed that the personality traits extroversion and emotional stability explain only 0.8% and 1.4% of the variance in job performance, respectively. By comparison, cognitive performance (intelligence) explained 42.5%!

So are personality traits really largely irrelevant at work? Get the answer in the video…

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Studies (small sample only):

Schmidt, F. L., Oh, I.-S., & Shaffer, J. A. (2016). The validity and utility of selection methods in personnel psychology: Practical and theoretical implications of 100 years of research findings. Working paper retrieved from www.researchgate.net. doi: 10.13140/RG.2.2.18843.26400

Van Aarde, N., Meiring, D., & Wiernik, B. M. (2017). The validity of the Big Five personality traits for job performance: Meta‐analyses of South African studies. International Journal of Selection and Assessment, 25(3), 223-239.

Wilmot, M. P., & Ones, D. S. (2019). A century of research on conscientiousness at work. Proceedings of the National Academy of Sciences, 116(46), 23004-23010.

Wilmot, M. P., Wanberg, C. R., Kammeyer-Mueller, J. D., & Ones, D. S. (2019). Extraversion advantages at work: A quantitative review and synthesis of the meta-analytic evidence. Journal of Applied Psychology, 104(12), 1447.

Zell, E., & Lesick, T. L. (2022). Big five personality traits and performance: A quantitative synthesis of 50+ meta‐analyses. Journal of Personality, 90(4), 559-573.

How can you spot people who will be excellent in their job?

Take a look at the following list and try to assess which of the factors are most important:

– School grades

– Handwriting

– Extroversion

– Conscientiousness

– Integrity

– Intelligence

– Openness to new experiences

– References

The search for the “perfect employee” has occupied personnel selection research for more than 100 years. One of the most influential and largest meta-analyses (Schmidt et al, 2016) provides remarkable insights (see video). Nevertheless, many companies unfortunately still do not sufficiently take these findings into account. The consequences can be devastating….

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Studies (small selection only):

Dazzi, C., & Pedrabissi, L. (2009). Graphology and personality: an empirical study on validity of handwriting analysis. Psychological reports, 105(3_suppl), 1255-1268.

Huffcutt, A. I., Culbertson, S. S., & Weyhrauch, W. S. (2014). Moving forward indirectly: Reanalyzing the validity of employment interviews with indirect range restriction methodology. International Journal of Selection and Assessment, 22(3), 297-309.

Hurtz, G. M., & Donovan, J. J. (2000). Personality and job performance: the Big Five revisited. Journal of applied psychology, 85(6), 869.

Kausel, E. E., Culbertson, S. S., & Madrid, H. P. (2016). Overconfidence in personnel selection: When and why unstructured interview information can hurt hiring decisions. Organizational Behavior and Human Decision Processes, 137, 27-44.

Neter, E., & Ben-Shakhar, G. (1989). The predictive validity of graphological inferences: A meta-analytic approach. Personality and Individual differences, 10(7), 737-745.

Schmidt, Frank L. and Oh, In-Sue and Shaffer, Jonathan A., The Validity and Utility of Selection Methods in Personnel Psychology: Practical and Theoretical Implications of 100 Years of Research Findings (October 17, 2016). Fox School of Business Research Paper. Available at SSRN: https://ssrn.com/abstract=2853669

Zell, E., & Lesick, T. L. (2022). Big five personality traits and performance: A quantitative synthesis of 50+ meta-analyses. Journal of Personality, 90(4), 559-573.

Do 9-ending prices really work?

Are people really so stupid that they perceive a price of 99.99 euros as so much cheaper than a price of 100 euros? And do 99-ending prices really lead to more sales and profits? These questions have been studied for many years by researchers in the field of business psychology (or price psychology).

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Studies (only a small selection):

Anderson, E. T., & Simester, D. I. (2003). Effects of $9 price endings on retail sales: Evidence from field experiments. Quantitative marketing and Economics, 1(1), 93-110.

Asamoah, E. S., & Chovancová, M. (2011). The influence of price endings on consumer behaviour: An application of the psychology of perception. Acta Universitatis agriculturae et silviculturae mendelianae Brunensis.

Bizer, G. Y., & Schindler, R. M. (2005). Direct evidence of ending-digit drop-off in price information processing. Psychology & Marketing, 22(10), 771-783.

Bray, J. P., & Harris, C. (2006). The effect of 9-ending prices on retail sales: A quantitative UK based field study. Journal of Marketing Management, 22(5-6), 601-617.

Felser, G. (2015). Advertising and consumer psychology. Springer Verlag.

Felser, G. (2013). Consumer psychology. Kohlhammer Verlag.

Parsa, H. G., & Njite, D. (2009). Psychology of pricing: A review and suggestions. Handbook of Hospitality Marketing Management, 375-402.

Schindler, R. M., & Kibarian, T. M. (1996). Increased consumer sales response though use of 99-ending prices. Journal of Retailing, 72(2), 187-199.

Schindler, R. M., & Kibarian, T. M. (2001). Image communicated by the use of 99 endings in advertised prices. Journal of Advertising, 30(4), 95-99.