A Nickel Ain't Worth a Dime Anymore: The Illusion of Money and the Rapid Encoding of Its True Value

Rongjun Yu and Yi Huang

PLOS ONE, 2013, vol. 8, issue 1, 1-8

Abstract: People often evaluate money based on its face value and overlook its real purchasing power, known as the money illusion. For example, the same 100 Chinese Yuan can buy many more goods in Tibet than in Beijing, but such difference in buying power is usually underestimated. Using event related potential combined with a gambling task, we sought to investigate the encoding of both the real value and the face value of money in the human brain. We found that the self-reported pleasantness of outcomes was modulated by both values. The feedback related negativity (FRN), which peaks around 250ms after feedback and is believed to be generated in the anterior cingulate cortex (ACC), was only modulated by the true value but not the face value of money. We conclude that the real value of money is rapidly encoded in the human brain even when participants exhibit the money illusion at the behavioral level.

Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0055025 (text/html)
https://journals.plos.org/plosone/article/file?id= ... 55025&type=printable (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0055025

DOI: 10.1371/journal.pone.0055025

Access Statistics for this article

More articles in PLOS ONE from Public Library of Science
Bibliographic data for series maintained by plosone ().