I disagree. We’re actually trained like this. Most of the time we enjoy “free” stuff, because it is free. If it wasn’t there, you wouldn’t get anything at all and most of the times it is not there. We don’t see the stuff as completely free, but we are indulged by it.
Remember that “you get what you pay for” applies equally well when you’ve just paid for overpriced junk.
- Giving you a list of N things.
This post itself is also kind of taking advantage of an easy way to manipulate you. This is a “List of N Things” type post which Paul Graham just wrote about ( http://www.paulgraham.com/nthings.html). This one even has lists inside lists, for double the effect, eh? This post is easy to read, even easier to not read but still think it’s good, and is just the kind of thing which could end up on the Digg front page.
And I’m not saying this is a bad post 
I see this all the time. My friend, like many people, isn’t rational when it comes to purchasing. He’s a bit skint (that means cheap) and will drive 10km out of their way, or do heaps of price comparison on something that’s only $50 just to save $10.
Time and time again I try to explain that they’ve wasted not only a day price comparing, but have also spend $8 in gas to save $10. Net price difference of a whopping $2 for a wasted weekend.
Better to pay $50 and $5 for doorstep delivery and spend the day at the beach.
The same person will, on impulse, buy a $200 outfit without thinking.
But then some people just like shopping I guess.
Interesting stuff. A couple of the examples don’t seem so irrational, though.
People moving from Lubbock to Pittsburgh can’t afford a big house. People moving from L.A. to Pittsburgh can afford one and probably get a capital gains tax cut for buying one.
If someone overcharges me $7 for a pen, they’re ripping me off and I will go elsewhere to avoid letting them think they can rip me off. If someone charges an extra $7 for a $450-dollar suit, I might figure the extra time to get it somewhere else is worth more to me than the $7.
About the Duke basketball tickets, the students probably couldn’t afford to pay more than $170, but there might be alumni able and willing to pay $2400.
Anybody notice that giving Kiss’s for free made a difference of only 4%? I’m not saying people don’t behave irrationally when they see FREE, but the example provided is kinda weak, showing only 4% difference.
You should definitely read Blink by Malcolm Gladwell.
These are interesting examples but I think many of them fail to account for all the factors that go into someone’s decision.
In the case of the $7 difference between a $25 pen and a $400+ suit, you’re talking about something that’s a relative commodity vs. an investment. Most people own far more pens than suits, so the value must take into account the utility which includes the purchase itself. How friendly is the staff at either suit store? How reliable or informative are they? What is their return policy, etc.
In the example of the 3 doors, it’s really hard to guage what’s irration and rational in this made-up example. If the students stood to make more than a few dollars then I bet they always optimize for price regardless of the loss of the other doors. Being that they were in a study, it’s quite possible that their decisions were based on attempts to try to figure out what the study is trying to uncover. Maybe the introduction of the disappearing doors led people to believe there would be some benefit to keeping all three doors available, as if perhaps the values would change and they would miss out on something. If those students truly beleived that the disappearing doors had consistently less value than the other door, I don’t think you would see the same behavior.
And regarding the Budweiser, I suspect you could add a lot of things to that beer to make it taste better. 
Several years ago, I carefully examined a presentation aimed at marketing one of our software products. Boy, that was shocking. By choosing the correct wording and presentation style it succeeded in creating the impression that the product is awesome and perfectly solves every problem in its domain without making any explicit promise. This way, customers will not be able to say they were decieved.
I don’t think I’ll ever be able to prepare such presentation.
I was wondering who gives kisses away for free, I had to read it 3 times to notice it’s about sweeties, not real kisses
Acutally, when you move from one country to another you usually change your job so that your new pay is relative to your new home, not your old town - but you’re still bound to the old pricings, that’s the irrationality in it.
@Josh
"And regarding the Budweiser, I suspect you could add a lot of things to that beer to make it taste better."
Cheap tequila. And if it tastes worse, at least you get hammered faster, or does standard economic theory say otherwise?
that’s one useful post!
"Brew A was Budweiser. Brew B was Budweiser, plus 2 drops of balsamic vinegar per ounce.
When students were not told about the nature of the beers, they overwhelmingly chose the balsamic beer."
So why don’t Bud add 2 drops of vinegar to their beers to improve the flavour?
So you’ve been employing this knowledge then Mr Atwood?
I feel duped.
I read it recently too - and also enjoyed it. I was thinking about the first one - yes, it’s irrational from a purely personal economic point-of-view, but possibly not from other perspectives. If a $455 suit varies in price by $7 (1.5%) then it’s most likely a pricing inefficiency: nobody’s going to get rich on the number of extra $7s they’re getting. If a $25 pen is overpriced by $7 (28%) then someone’s trying to rip me off and I’m prepared to go to some additional effort to deny them the satisfaction. It’s not a tangible economic benefit, sure, but I’m going to feel better in myself and that’s worth something. Even better, if we all behave similarly “irrationally” then the rip-off merchant will either adjust his prices or be replaced by a vendor who operates fairly. Then we won’t have to drive that 15 minutes and more.
6 is silly, when people say they will buy something for $X and sell it for $Y>X they are including the “cost” of sleeping out for weeks to get it. This is a statement that they would sleep out for weeks to get $2,230
What I just picked up from this post? Budweiser tastes better with 2 drops of balsamic vinegar added (Provided you don’t tell anyone you added it that is)
Tried the vinegar trick with Nobelaner. True, it’s no Budweiser (i.e. it has some taste on its own), but I don’t notice any difference in the taste. It is slightly darker, which is usually perceived as good.
“Scale your purchases to your needs, not your circumstances or wallet size. What do you actually use? How much do you use it, and how frequently?”
It’s disgraceful that the average citizen of the USA still needs a book to tell them this.
this is turning into cnn style article columns…