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Not Enough Meaning

We simplify probabilities and numbers to make them easier to think about

Denomination effect

Description

The tendency to spend more money when it is denominated in small amounts (e.g., coins) rather than large amounts (e.g., bills).

Denomination effect in business decision

Consumers might be more willing to make several small purchases with loose change or small bills than to break a large bill for a single, similar-valued purchase. Businesses might leverage this with pricing strategies.

Denomination effect in personal life decision

You're more likely to spend a small bill than break a large one because large denominations feel more valuable.