The Price Paradox: How Neural Representations of Experienced Value are Impacted by Price

Written by WiNSS Scholar Isabel Brito

Marketing efforts focus on executing successful exchanges such that value is delivered to customers, and, in return, their loyalty delivers value to the firm. The customer journey begins with the identification of a need or desire, which is followed by an evaluation of the available options and ultimately a decision to purchase. The concept of value, nonetheless, is a tricky one to consider. Customers extract different types of value from different transactions, much of which is subjective. Traditionally, value is split into three different types: functional, monetary or psychological (Chernev, 2018). Each value category can be informed by a variety of cues, which may be either intrinsic properties of the product or elements extracted from the context. An interesting cue to consider is price.

Price is a key determinant of a transaction’s value to consumers and companies alike. High prices can grant consumers psychological value in the form of social currency, while striking a bargain heightens monetary value. Similarly, functional value can be enhanced by a high price in those who interpret it as an indicator of superior quality. Although on the surface the opposite may seem true, price is much more than just a revenue indicator for a firm. The field of consumer psychology has demonstrated that price has the power to impact product perception and can, therefore, be a key differentiator in consumers’ evaluation process (Holdershaw et al., 1997; Wadhwa & Zhang, 2015). In recent years, neuroscience has been able to expand on this behavioral finding, making future applications more promising.

In one of the most influential papers in the field of neuromarketing, Plassman et al. (2008) investigated the neural activity of twenty subjects as they were given five samples of wine. With no information aside from the samples’ retail price, participants were asked to rate each on its pleasantness. They were not aware, however, that the five samples contained just three different wines – such that two wines were tested twice, once at a high price and once at a low price (e.g. Wine 1 was presented both at $90 and at $10). Aside from investigating behavioral measures, which yielded findings like the strong correlation between reported pleasantness and price, the experiment went beyond the realm of psychology, leveraging functional magnetic resonance imaging (fMRI) data to observe neural activity and experienced pleasure in response to price.

The research found differential neural activity during degustation for the wines with higher price labels. Greater activation of prefrontal areas associated with decision-making and reward, like the ventromedial prefrontal cortex (vmPFC) and the medial orbitofrontal cortex (mOFC), was observed in response to the most expensive wine samples. The activation of these areas in assessing pleasantness of wine is particularly significant given the demonstrated link between these regions and subjective value (Viviani, 2014), suggesting that price may be involved in value assessment. Interestingly, the impact of price on mOFC activity was higher for cheaper wines, which suggests price increases have a greater impact on mOFC activation at lower prices.

Overall, the study demonstrated that an increase in perceived price of wine, by also increasing taste expectations, has a direct impact on mOFC activity. This, in turn, affects experience. The mOFC has demonstrated involvement in a myriad of cognitive processes, including value computation and decision-making, motivation and drive, and reward saliency. The known involvement of this brain area in the aforementioned capacities makes its differential activation in this scenario especially intriguing. The allure of this data is further supplemented by the lack of evidence found on distinctive activity in cortical sensory areas depending on price. These findings, and lack thereof, suggest top-down cognitive processes and bottom-up sensory experiences are integrated, likely in the mOFC, to produce experienced pleasantness. Plassman et al. suggest from their study that price likely modulates the “hedonic experience of flavor” and not the underlying sensory processes themselves.

Price has been known for years to play a role in pushing a product from a consideration set to an actual purchase. Yet, increasingly more so, companies are concerned with post-purchase behavior. Just like customers, firms want to maximize their value by fostering a loyal customer base. Because satisfaction, which is a function of expectation vs. experience, is the key driver to loyalty, making the jump from consideration set to purchase is no longer enough. Customers’ expectations for a product should be exceeded by experience every time. This is why the findings of Plassman et al.’s paper, which indicate that experienced value is not necessarily based on the intrinsic properties of a product, holds promise within the field of marketing. If product experience lies beyond the product itself and is informed by components of marketing strategy, immense promise lies in understanding how exactly these manipulations shift product perception to improve customer loyalty.

Marketing actions may, therefore, have more power than initially thought. Price has been shown to modulate neural representations and behavioral measures of experienced pleasantness. More research is needed to understand the extent to which other cues, such as packaging and promotional channels, also impact experience in addition to expectations. In the future, research will also need to investigate how these different cues interact with each other in the brain, and whether some of them hold more importance to our overall value perception of a product than others. All in all, with promising groundwork findings, neuromarketing is garnering increasing attention. This budding field aims to take the phenomena observed in consumer psychology a step further and explain the biological basis for customer choices and preferences. Although much more research is necessary before findings are widely applicable, turning our attention to the promise of neuromarketing is imperative in order to incentivize the growth of the field.



Chernev, A. (2018). Strategic Marketing Management (Ninth). Cerebellum Press.

Holdershaw, Judith & Gendall, Philip & Garland, Ron. (1997). The Widespread Use of Odd Pricing in the Retail Sector. Marketing Bulletin. 8.

Plassmann, Hilke & O’Doherty, John & Shiv, Baba & Rangel, Antonio. (2008). Marketing Actions Can Modulate Neural Representations of Experienced Pleasantness. Proceedings of the National Academy of Sciences of the United States of America. 105. 1050-4. 10.1073/pnas.0706929105.

Viviani, Roberto. (2014). Neural Correlates of Emotion Regulation in the Ventral Prefrontal Cortex and the Encoding of Subjective Value and Economic Utility. Frontiers in psychiatry. 5. 123. 10.3389/fpsyt.2014.00123.

Wadhwa, Monica & Zhang, Kuangjie. (2015). This Number Just Feels Right: The Impact of Roundedness of Price Numbers on Product Evaluations. Journal of Consumer Research. 41. 1172-1185. 10.1086/678484.

Isabel Brito is a Cognitive Science major (C’20) from Rio de Janeiro, Brazil.