Does “000,000” matter? Psychological effects of Turkish monetary reform

Deceiving Our Minds: A Qualitative Exploration of the Money Illusion in Post-redenomination Ghana

“…This experience stands in marked contrast to that which occurred in Turkey in January 2005, which incidentally also slashed a number of zeros from the old currency similar to what was implemented in Ghana. As reported by Amado et al (2007), most Turks had adjusted well to the redenomination barely 6 months after the new currency was introduced. The question that begs for answers is why there are markedly different reactions to the same exercise in Ghana and Turkey.…”

“…In contrast, the value of the Irish Punt, for instance, was greater than the Euro, with a conversion rate of 1 IRP to 1.27 Euro, which meant that conversions involved multiplication. (As such, the process of conversion in Ghana would be more similar to the Turkish currency change (see Amado et al 2007), which involved dropping six zeros, than to the Irish experience. However, due to money conventions, dropping six zeros is easier than dropping four).…”

“…The growing body of redenomination research, most of it focusing on the Euro, includes data collected through surveys (e.g., Gamble et al 2002, study 1), observation (e.g., Hobijn et al 2006;Kühberger and Keul 2003) , and experiments (e.g., Amado et al 2007;Marques and Dehaene 2004;Mussweiler and Englich 2003;Tyszka and Przybyszewski 2006). The least popular mode of investigation so far has been qualitative research, which can serve as a means to explore individual experiences, adaptation processes, and meaning-making mechanisms related to currency change.…”

The Price Knowledge Paradox: Why Consumers Have Lower Confidence in, but Better Recall of Unfamiliar Prices

“…Depending on the exchange rate between the new and the old currency units, the nominal value of prices displayed either increases or decreases and, therefore, the degree of uncertainty about the real value of products may vary. However, both in the case of an easy monetary change as the currency devaluation in Turkey [4] or for more complex arithmetic conversion as for the Euro introduction [16], prior research shows that buyers are prone to "money illusion" effects (cf. [20]) at the initial time of introduction of the new currency standard.…”

Anchoring: A Valid Explanation for Biased Forecasts When Rational Predictions are Easily Accessible and Well Incentivized?

“…Tversky and Kahnemann's (1974) seminal paper presented the 'anchoring-and-adjustment' heuristic, from which numerous studies have evolved that show a pervasive influence of anchoring in decision-making. The aspects tested are diverse and range from factual knowledge (Blankenship et al 2008;Wegener et al 2001) to probability calculations (Chapman and Johnson 1999) to price estimations after monetary reforms (Amado et al 2007). Task-specific expertise is shown to be irrelevant for the anchoring bias, as in Englich and Soder (2009), for a juridical context supporting the assumption that forecasting experts are susceptible to anchor heuristics.…”