Money Illusion and Mental Currency Conversion
An experiment in eight different countries test whether money illusion played a role in consumers' perception of the new currency, and the moderating effect of ease of conversion for converting local currencies into Euro. Results show that consumers use rules of thumb when mentally converting prices in Euro into the old local currency. Furthermore, consumers correct for the biases introduced by the rules of thumb, where subjective ease of conversion is used as a heuristic for the correction of the rule of thumb estimates. However, neither the corrections nor the actual price estimates are influenced by money illusion.
Citation:
Priya Raghubir, Joydeep Srivastava, and Ravi Dhar (2005) ,"Money Illusion and Mental Currency Conversion", in E - European Advances in Consumer Research Volume 7, eds. Karin M. Ekstrom and Helene Brembeck, Goteborg, Sweden : Association for Consumer Research, Pages: 542-542.
Authors
Priya Raghubir, University of California at Berkeley
Joydeep Srivastava, University of Maryland
Ravi Dhar, Yale University
Volume
E - European Advances in Consumer Research Volume 7 | 2005
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