The Feedback-Related Negativity and the P300 Brain Potential Are Sensitive to Price Expectation Violations in a Virtual Shopping Task

Abstract

A large body of evidence shows that buying behaviour is strongly determined by consumers’ price expectations and the extent to which real prices violate these expectations. Despite the importance of this phenomenon, little is known regarding its neural mechanisms. Here we show that two patterns of electrical brain activity known to index prediction errors–the Feedback-Related Negativity (FRN) and the feedback-related P300 –were sensitive to price offers that were cheaper than participants’ expectations. In addition, we also found that FRN amplitude time-locked to price offers predicted whether a product would be subsequently purchased or not, and further analyses suggest that this result was driven by the sensitivity of the FRN to positive price expectation violations. This finding strongly suggests that ensembles of neurons coding positive prediction errors play a critical role in real-life consumer behaviour. Further, these findings indicate that theoretical models based on the notion of prediction error, such as the Reinforcement Learning Theory, can provide a neurobiologically grounded account of consumer behavior.

Neural signals of selective attention are modulated by subjective preferences and buying decisions in a virtual shopping task

“…The effects of preference on the N200 replicated Telpaz et al (2015), and seem to confirm a growing trend indicating that ERPs occurring in the N200 vicinity reflect processes linked to consumer behaviour (Schaefer et al, 2016;Telpaz et al, 2015). N200 effects are also commonly observed in research using emotional scenes or evolutionaryrelated stimuli (Olofsson et al, 2008;Walker et al, 2011).…”

“…This chosen product and Òcash savingsÓ, (the RM100 allocation minus the offered price for the product) were given to participants later. This approach was used to make the virtual shopping experience more realistic (see Knutson et al, 2007;Schaefer et al, 2016). In order to encourage participants to purchase products during the experiment, offered prices were discounted from the means of the prices by 25%.…”

“…Furthermore, we sought to minimize possible biases that could be caused by strategies based on buying a minimal amount of products. To achieve this goal, and following previous research (Schaefer et al, 2016), participants lost money on their final cash savings if they did not buy a minimum number of products, according to a schedule previously explained to them. If the number of bought products were less than or equal to 18, RM30 (7.2 USD) would be deducted from the savings.…”

“…For instance, Telpaz et al (2015) found a relationship between the N200 component and product preferences measured by a behavioural choice procedure in which participants needed to choose between pairs of products. Telpaz et al (2015) suggested that this N200 effect could reflect an effect of the Feedback-Related Negativity (FRN), an ERP component that overlaps with the N200, and which has been linked to the evaluation of prediction errors in decision-making tasks (Mushtaq, Wilkie, Mon-Williams, & Schaefer, 2016), and more recently, to positive surprise and buying preferences in a virtual shopping task (Schaefer et al, 2016). Furthermore, a study using magnetoencephalography (MEG) found that early brain potentials (between 110 and 230 ms post-stimulus onset) reflecting motivated attention were related to gender-specific preferences for consumer goods (Junghšfer et al, 2010).…”

“…In order to fill an important gap in the literature, we focused on the positive slow waves (PSW) and the LPP, but we also tested the effects of consumer preference on the amplitude of the N200 brain potentials in order to provide a comparison with previous research. In order to attain this goal, we asked participants to take part in a modified version of a shopping task used in previous studies (Knutson et al, 2007;Plassmann et al, 2007;Schaefer et al, 2016). In this task, participants were shown pictures of familiar consumer goods, which they could later purchase, and were asked to rate their level of preference towards each item while their scalp EEG was recorded.…”