The neural bases of price estimation: Effects of size and precision of the estimate

Abstract

People are often confronted with the need of estimating the market price of goods. An important question is how people estimate prices, given the variability of products and prices available. Using event-related fMRI, we investigated how numerical processing modulates the neural bases of retail price estimation by focusing on two numerical dimensions: the size and precision of the estimates. Participants were presented with several product labels and made market price estimates for those products. Measures of product buying frequency and market price variability were also collected. The estimation of higher prices required longer response times, was associated with greater variation in responses across participants, and correlated with increasing medial and lateral prefrontal cortex (PFC) activity. Moreover, price estimates followed Weber’s law, a hallmark feature of numerical processing. Increasing accuracy in price estimation, indexed by decreasing Weber fraction, engaged the intraparietal sulcus (IPS), a critical region in numerical processing. Our findings provide evidence for distinguishable neural mechanisms associated with the size and the precision of price estimates.