Researchers: Sumitava Mukherjee, Narayanan Srinivasan, V.S.C Pammi & Narayanan Srinivasan
Many of us have bought or seen somebody buying tomatoes. The first interesting question in the customer is the current price, with reference to the known or remembered price from the past purchase. Prospect Theory’s value function explained this relative valuation through the principle of loss aversion which says, people weight losses more than gains emotionally. So, a gain of 10 is psychologically less than a loss of 10.
Interestingly, a large number of studies have looked at big magnitudes. But, we were concerned about the average customer taking a walk in the evening looking to purchase tomatoes : We were thinking about small amounts.