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PAPER: How Our Brain Determines if the Product is Worth the Price | Harvard Business School

In the first experiment, conducted at an imaging center on the Stanford University campus, each participant was given $40 of shopping money before viewing a series of 80 products and their prices on a screen inside the fMRI machine. "This made the shopping experience more real," Karmarkar says.

To encourage purchasing, the products were offered at sub-retail prices. Sometimes participants saw the price first, and sometimes they saw the product first. But in every case, they eventually saw an image of both the product and the price presented together. At that point, they chose whether to purchase the product, indicating yes or no with the push of a button. After exiting the machine, participants filled out a survey to rate how much they had liked each product, on a scale of 1 to 7.

The researchers focused on brain activity at the moment participants saw the product and price presented together. They were most interested in the medial prefrontal cortex (the area in the brain that deals with estimating decision value) and the nucleus accumbens (an area that's been called the pleasure center, and whose activity is correlated with whether a product is viscerally desirable). "What we cared about was whether the neural patterns in these areas looked different at the point when the information on the screen was eventually the same," Karmarkar says.

The results showed that the brain activity varied according to whether the participant had seen the price or product first. "The pattern of activity in the prefrontal cortex suggested to us that sequence matters: At the very simplest, the neural signals looked different when the price came first versus when the product came first," Karmarkar says. "When the product came first, the decision question seemed to be one of 'Do I like it?' and when the price came first, the question seemed to be 'Is it worth it?' "

That said, price primacy didn't have much of an effect on actual purchasing behavior. Participants bought about the same number of items and reported similar "liking" ratings regardless of whether they had seen a product or price first. The researchers suspected that even if participants were more critical of a product's value in the price primacy condition, the products were equally attractive under both conditions.

Most of the participants were in their 20s, and most of the products appealed to their demographic—movies, clothing, noise-canceling headphones, and so on. "If you really love something, and you can afford it, you're going to buy it," Karmarkar says. "For those kinds of 'easy' decisions, it doesn't matter much whether the product or the price comes first."

And while the results of this initial experiment had been significant to neuroscience, Karmarkar's team also wanted to show that their research could have real-world implications for retailers—a direct effect on whether a consumer decided to buy a product. They hypothesized that price primacy might actually increase the likelihood of buying products, but only if the decision was related more to the product's usefulness than to pure emotional desire.

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How Our Brain Determines if the Product is Worth the Price.