Pricing influences consumer behavior. A multidisciplinary team of researchers from Russia has shown that the brain reacts instantly when the price of a product does not meet expectations. This engages brain areas involved in decision-making and learning from past experiences. The study, which was published on 28 January 2025 in Frontiers in Human Neuroscience, used EEG and MEG to measure brain activity in response to different product prices. The findings suggest that pricing perception is not a mere conscious choice but also an automatic cognitive process.
Scientists from Russia Explored How the Human Brain Makes Purchasing Decisions and Responds to Prices
Background
The multidisciplinary team headed by Anna N. Shestakova, director at the Institute for Cognitive Neuroscience of HSE University, investigated how individuals evaluate prices. Participants were shown images of iPhone, Nokia, and Xiaomi. Each phone was followed by a hypothetical price. The targeted word “cheap” or “expensive” was then displayed. Participants had to determine whether the word correctly described the price.
Note that the aforementioned was designed to trigger brain responses to price incongruities. The idea was that the brain would register a cognitive conflict if a price was significantly different from expectations. Determining the different neurological responses required using two neuroimaging techniques. These are electroencephalography or EEG and magnetoencephalography or MMG. Below are the details of how each was used:
• Two-Round EEG Experiments: EEG measures electrical brain activity through scalp electrodes to detect rapid neural responses to stimuli. The researchers focused on the N400 brainwave component. It is associated with detecting unexpected information or semantic incongruities like unexpected words in a sentence. Hence, when the displayed price did not match the expected price category, the N400-like response was observed.
• Specific MMG Results Analysis: MEG is a more precise technique. It records magnetic fields generated by neural activity. It localizes where in the brain the price incongruities were processed. They key areas activated were the Ventromedial Prefrontal Cortex, involved in value assessment and decision-making, and the Anterior Cingulate Cortex, responsible for error detection and learning from rewards or punishments.
Findings
• The Brain Automatically Detects Pricing Errors: When participants saw a price that did not match expectations, their brains generated an N400-like response. This response was stronger for overpriced products than for underpriced ones.
• Overpricing and Underpricing Reaction: Overpriced products triggered a stronger neural response. This suggests that consumers are more sensitive to high prices than to discounts. Underpriced products still activated the decision-making area in the brain but the response was weaker. This indicates that extreme price reductions can also be perceived as suspicious or confusing.
• Brain Areas Responsible for Price Perception: The Ventromedial Prefrontal Cortex engages in evaluating whether a price aligns with expectations. The Anterior Cingulate Cortex signals cognitive conflict when an unexpected price is detected.
• Product Price Expectation Varies by Brand: It is worth noting that the prices of iPhones have the smallest acceptable range among the three smartphone devices shown to the participants. This means that consumers had a clear expectation of its value. Xiaomi had the broadest range among the three. This indicates that consumers were less certain about what its price should be.
Implications
Both EEG and MEG could be used in pricing research to determine how consumers perceive price fairness before a product launch. This approach falls within the broader concept of the emerging subfield called neuromarketing. Conventional surveys often fail because consumers may not accurately report their true perceptions.
Pricing strategies should also be evaluated and utilized with caution. Overpricing can result in consumer rejection. Extreme discounts may raise doubts about product quality. Marketers can use neuroscience-based insights to optimize pricing and improve customer perception. It is worth mentioning that the broad price range of Xiaomi suggests some brands have greater flexibility in pricing without triggering negative responses.
It is also important to underscore and reiterate the fact that the study also demonstrated that the evaluation of prices transpires before conscious decision-making. This means pricing errors can negatively influence sales even if consumers do not explicitly notice them. The communication of proper prices is imperative in sales.
FURTHER READING AND REFERENCE
- Gorin, A., Kuznetsova, E., Kislov, A., Levchenko, E., Klucharev, V., Moiseeva, V., Yurchenko, A., Luzhin, A., Galkina, N., and Shestakova, A. N. 2025. “Neural Correlates of the Non-Optimal Price: An MEG/EEG Study. In Frontiers in Human Neuroscience. Frontiers Media SA. DOI: 3389/fnhum.2025.1470662