300 cents is worth more than $3?
It turns out people focus more on the numeric value of economic rewards. If the numeral is bigger—300 cents instead of $3—people act as if it’s worth more. A professor and a graduate student of psychology at Ohio State University conducted the experiment as a variation on the prisoner’s dilemma. The pairs of participants—kept unaware of their partner’s choices—were told that if they both cooperated with each other, they would earn $3 each. If one decided to defect, he or she got $5, while the other cooperating participant got nothing. If both decided to defect, each got just $1.
The new wrinkle in the study, however, was offering half the 24 pairs of participants the equivalent in cents instead of dollars. Students, apparently valuing the 300 cents more than $3, chose to cooperate more often. Even stranger, the percentage of participants who cooperated remained the same whether they were vying for 300 cents or $300.
Just another lesson in the many ways human beings perceive value. Hopefully it doesn’t ruin your plans to start listing prices in pennies.