The denomination–spending matching effect

Yi Li, Mario Pandelaere

Research output: Contribution to journalArticlepeer-review

Abstract

Prior research has documented a denomination effect, such that consumers are less willing to spend banknotes in large denominations (e.g., $100 bill) than in small denominations (e.g., five $20 bills). This research shows that the denomination effect persists when prices are low, but when prices are high, a reverse denomination effect applies, such that consumers prefer to pay for expensive products with large denominations. To accommodate both effects in a general framework, the authors propose a denomination–spending matching effect: consumers prefer to pay with a denomination that matches the spending amount. This matching effect is generalizable to other payment means (i.e., gift cards). A denomination fit underlies this matching effect—when denomination and spending have a similar magnitude, consumers feel right about the purchase. This experience of denomination fit prompts consumers to choose products where the price matches the denomination and increases consumers’ purchase satisfaction and anticipated consumption experience.
Original languageEnglish
Pages (from-to)338-349
Number of pages12
JournalJournal of Business Research
Volume128
DOIs
Publication statusPublished - May 2021

Keywords

  • Denomination
  • Matching effect
  • Denomination fit
  • Gift cards
  • Product choice
  • Purchase satisfaction

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