While talking with friends, you learn that your former boss has been sentenced for fraud. One of your friends thinks your boss received a jail term of “one year” and another friend reports that it is “366 days”. Who seems more knowledgeable about the details of the case? Similarly, suppose you want to order a custom made good. You ask the service representative how long your order would take if you placed it today. Would it make a difference if the representative answered, “one month”, “four weeks” or “30 days”? In both examples, the respective expressions refer to the same extension of time and are often used interchangeably. Nevertheless, recipients may perceive the speakers’ reports as differentially precise and reliable. The present research addresses this possibility and explores its consequences for marketing communications and consumer decision making.
It turns out the granularity of what you say has a large impact on recipients’ confidence in the accuracy of the information.
In everyday life, consumers encounter many quantitative expressions. Even when the values are precise and well-defined, consumers’ understanding of quantitative expressions often deviates from their objective meaning. Previous research identified a number of cognitive heuristics that contribute to these biases. As observed in other domains of judgment, however, biases are not solely a function of individuals’ thoughts about the respective content domain or of the accessibility of applicable procedures. Instead, they often arise from tacit assumptions underlying the conduct of conversation, which license pragmatic inferences that go beyond the literal meaning of a speaker’s utterance.
While violations are common, it is generally understood that in a conversation that speakers should provide only truthful information that is relevant to the purpose of the conversation in a matter that is easy to understad by providing the relevant level of detail.
Even if you doubt the speaker is cooperative, you first need to comprehend what the speaker intended before you can (mentally) correct them.
In general, quantitative communications provide more information when the quantity is expressed in fine grained rather than coarse forms. This is most apparent when the information is communicated in form of an interval, for example, when a price estimate is expressed as “$5,000 to $6,000” or “$1,000 to $10,000”. Here, the choice of interval width conveys the communicator’s confidence in the accuracy of the estimate. Not surprisingly, recipients prefer narrow intervals, which provide more information. Moreover, they are willing to sacrifice formal accuracy for informational value. For example, when the true value is $22.5 billion, 80% of participants prefer the estimate “$18 to 20 billion” over the estimate “$20 to 40 billion”, even though the latter interval includes the correct value whereas the former does not.
Whereas interval estimates convey the intended level of precision through the width of the interval, explicit precision information is missing when the communicator offers only one quantitative value, thus providing a point estimate. Nevertheless, recipients are aware that estimates come with a certain degree of uncertainty. Hence, you would not consider it misleading if a friend who is driving from another city said “I’ll be there in two hours”, even though she is aware that it may take her as little as one and a half hours or as much as two and a half hours to arrive. On the other hand, you might wonder what has happened to her if she told you in the same circumstance that she’ll arrive “in 114 minutes”, but has not yet shown up 30 minutes later. As this example illustrates, point estimates come with an implied interval and the size of this interval varies with the level of granularity in which the estimate is expressed.
We assume that recipients are sensitive to communicators’ choice of granularity and take it into account when they interpret communicators’ utterances. Hence, we predict (i) that recipients perceive the same quantitative estimate as more precise when it is expressed in fine grained rather than coarse units, resulting (ii) in narrower interval estimates (study 1
The authors conclude
Drawing on these assumptions, consumers infer (i) that the same quantitative estimate is of higher precision when it is conveyed in fine-grained (e.g., 104 weeks) rather than coarse (e.g., 2 years) units. This (ii) influences their confidence in the estimate as reflected in the width of the interval that they assume to contain the true value.
You can find the full study here.
H/T WSJ Ideas Market