Price Attractiveness and Price Complexity: Why People Prefer Level-Payment Loans
The improving sequence effect suggests that in choices between a rising earning and any other sequences, participants prefer the rising earning. Recent studies show that the improving sequence effect also exists in a loan context. As consumers have a strong preference for falling loan profiles, bank...
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Frontiers Media S.A.
2021-06-01
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Online Access: | https://www.frontiersin.org/articles/10.3389/fpsyg.2021.532696/full |
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doaj-b3405a7f0b2a4c948497115f2eb55d112021-06-10T04:26:04ZengFrontiers Media S.A.Frontiers in Psychology1664-10782021-06-011210.3389/fpsyg.2021.532696532696Price Attractiveness and Price Complexity: Why People Prefer Level-Payment LoansYang LuJian WangChenyang LiHaoya HuangXintian ZhuangThe improving sequence effect suggests that in choices between a rising earning and any other sequences, participants prefer the rising earning. Recent studies show that the improving sequence effect also exists in a loan context. As consumers have a strong preference for falling loan profiles, banks may consider to offer loans in which the loan repayments concentrate at the beginning of the loan term. In this paper, we examined the improving sequence effect in context of a car loan with three repayment plans expressed in temporally reframed prices (TRP). By regressing the evaluation of loan profiles on the perceived price attractiveness, price complexity, TRP and the interaction terms, we find that (1) the perceived price attractiveness and price complexity significantly predict the loan evaluation, and they also explain a significant proportion of variance in loan evaluation; (2) the TRP effect interacts with the improving sequence effect. Specifically, with the introduction of TRP, respondents prefer constant profiles over falling profiles. TRP may explain why level-payment loans are still popular in real world, though the improving sequence effect suggests otherwise.https://www.frontiersin.org/articles/10.3389/fpsyg.2021.532696/fullsequence effecttemporal reframing of priceq-exponential discount modelintertemporal choicediscounted utility model |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Yang Lu Jian Wang Chenyang Li Haoya Huang Xintian Zhuang |
spellingShingle |
Yang Lu Jian Wang Chenyang Li Haoya Huang Xintian Zhuang Price Attractiveness and Price Complexity: Why People Prefer Level-Payment Loans Frontiers in Psychology sequence effect temporal reframing of price q-exponential discount model intertemporal choice discounted utility model |
author_facet |
Yang Lu Jian Wang Chenyang Li Haoya Huang Xintian Zhuang |
author_sort |
Yang Lu |
title |
Price Attractiveness and Price Complexity: Why People Prefer Level-Payment Loans |
title_short |
Price Attractiveness and Price Complexity: Why People Prefer Level-Payment Loans |
title_full |
Price Attractiveness and Price Complexity: Why People Prefer Level-Payment Loans |
title_fullStr |
Price Attractiveness and Price Complexity: Why People Prefer Level-Payment Loans |
title_full_unstemmed |
Price Attractiveness and Price Complexity: Why People Prefer Level-Payment Loans |
title_sort |
price attractiveness and price complexity: why people prefer level-payment loans |
publisher |
Frontiers Media S.A. |
series |
Frontiers in Psychology |
issn |
1664-1078 |
publishDate |
2021-06-01 |
description |
The improving sequence effect suggests that in choices between a rising earning and any other sequences, participants prefer the rising earning. Recent studies show that the improving sequence effect also exists in a loan context. As consumers have a strong preference for falling loan profiles, banks may consider to offer loans in which the loan repayments concentrate at the beginning of the loan term. In this paper, we examined the improving sequence effect in context of a car loan with three repayment plans expressed in temporally reframed prices (TRP). By regressing the evaluation of loan profiles on the perceived price attractiveness, price complexity, TRP and the interaction terms, we find that (1) the perceived price attractiveness and price complexity significantly predict the loan evaluation, and they also explain a significant proportion of variance in loan evaluation; (2) the TRP effect interacts with the improving sequence effect. Specifically, with the introduction of TRP, respondents prefer constant profiles over falling profiles. TRP may explain why level-payment loans are still popular in real world, though the improving sequence effect suggests otherwise. |
topic |
sequence effect temporal reframing of price q-exponential discount model intertemporal choice discounted utility model |
url |
https://www.frontiersin.org/articles/10.3389/fpsyg.2021.532696/full |
work_keys_str_mv |
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