A Note on the Exposure Effect and Currency Valuation

Abstract: This thesis investigates whether the exposure effect, according to which people tend to value an object more the larger their previous exposure to it, affects how people perceive the purchasing power of banknotes. It is done by letting participants look at pictures of either 1000 SEK or 500 SEK banknotes and then estimate the amount of different goods that could be purchased using the displayed banknote. Mean estimates for each good and on an aggregated level are then compared. Despite previous findings in a similar study, this thesis finds no evidence for any difference in perceived purchasing power between the different banknotes.