The psychology of discounting: Something doesn’t add up

WHEN retailers want to entice customers to buy a particular product, they typically offer it at a discount. According to a new study to be published in the Journal of Marketing, they are missing a trick.

A team of researchers, led by Akshay Rao of the University of Minnesota’s Carlson School of Management, looked at consumers’ attitudes to discounting. Shoppers, they found, much prefer getting something extra free to getting something cheaper. The main reason is that most people are useless at fractions.