Easy on the mind, easy on the wallet: The roles of familiarity and processing fluency in valuation judgments

Abstract

Although people routinely estimate the value of items in their environment, from goods and services to natural resources and lost earnings following an accident, the processes that underlie human valuation estimates are not well understood. We show that people use familiarity and fluency-the ease with which they process information-to determine an item's value. In three experiments, participants believed that familiar forms of currency (e.g., a familiar $1 bill) had greater purchasing power than their unfamiliar counterparts (e.g., a rare and unfamiliar coin). Mechanistic analyses showed a positive correlation between participants' familiarity with the unfamiliar currency and their estimates of its value. We conclude by discussing the theoretical and practical implications of our findings for researchers, marketing experts, and policymakers alike.