Levels of discounting

Prepared By Manu Melwin JoyResearch Scholar

School of Management StudiesCUSAT, Kerala, India.Phone – 9744551114

Mail – manu_melwinjoy@yahoo.com

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Discount Matrix

• Discounting results in

unresolved problems.

• Thus, if we can devise a

systematic way of identifying

the nature and intensity of

discounting, we will have a

powerful tool for problem

solving.

• Such a tool is called discount

matrix.

Discount Matrix

• Discount matrix was developed

by Ken Mellor and Eric Sigmund.

• The discount matrix starts from

the idea that we classify

discounts according to three

different criteria.

• Area.

• Type.

• Level.

Levels of discounting

• The four levels of

discounting are:

• Existence.

• Significance.

• Change

possibilities.

• Personal abilities

Discounting- Existence• In the example, I was

discounting the existence of my own options to solve the problem.

• I didn’t even consider the possibility of, for example, walking over and speaking to the waiter instead of gesturing to him.

Discounting- Significance• If I had been discounting the

significance of my options, I might have said to my friend: “ I suppose I could go over and ask him.

• But I bet asking him wouldn’t make a difference.

• Here, I did have realized there was something different I could do, but blanked out the possibility that his action could have any effect.

Discounting- Change possibilities

Discounting my options at

the level of change

possibilities, I might have

said: “ Of course, I could

walk across and collar the

fellow. But people just

don’t do that in

restaurants”.

Discounting- Change possibilities

In this case, I would have

let myself realize that the

option existed and that it

might have results, while

ignoring the possibility that

anyone could actually put

the option into practice.

Discounting- Personal Abilities

• Here I am aware the options exists and could bring results.

• I realize that some people in the world might well use that option.

• But I dismiss my own ability to do so.

Thank you

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