Adapting to the Euro: Evidence from bias reduction

This study examines the psychological consequences of the introduction of the Euro. People who are not used to the new currency experience higher levels of uncertainty when processing Euro prices and may consequently be more susceptible to biasing influences. We demonstrate that in Winter 2001 – immediately before the introduction of the Euro – German participants were indeed more strongly influenced by the anchoring bias – the assimilation of a numeric estimate towards a previously considered anchor value – when making price estimates in Euro than in German Mark. By Summer 2002, however, this pattern was completely reversed so that Euro estimates were less biased than Mark estimates. This suggests that people rapidly adapted to the new currency. The implications of these findings for the consequences of the introduction of the Euro are discussed. 2003 Elsevier Science B.V. All rights reserved. PsycINFO classification: 3040 JEL classification: D81