The Off by 100% Bias: The Effects of Percentage Changes Greater than 100% on Magnitude Judgments and Consumer Choice

Abstract

Abstract Percentage changes greater than 100% are frequently used in consumer contexts; for example, a cordless vacuum cleaner may boast “125% longer runtime” compared to competitors. Via six studies (n = 2,395) and 11 supplementary studies (n = 3,249), the current research shows that consumers systematically underestimate the magnitude of percentage changes greater than 100%. Specifically, many consumers apply the relative size usage (e.g., “125% of,” equivalent to 25% more) instead of the appropriate relative change (e.g., “125% more,” equivalent to 100% more + 25% more), which leads them to be off by exactly 100% in their magnitude estimates. The rate of bias decreases when the difference between these two usages is emphasized. The Off by 100% bias occurs across a variety of consumer contexts, influencing behavioral intentions and incentive-compatible choice. The findings make theoretical contributions to research on processing of percentages, probability versus frequency formats, and magnitude judgments. Finally, understanding how different presentation formats of the same information can lead to different magnitude judgments enables marketers and policymakers to ensure more effective communication.