3 explains Linux adoption. All the downsides it has would be considered horrible bugs in Windows (or any OS you pay for), but are completely acceptable from a “free” OS.
About the Truffles vs. the Hershey Kisses, I think we’re supposed to understand that the price for a Truffle was a great bargain. Let me translate the situation in that vein:
Given the choice between a dual-quad-core 3.76GhZ server with 4TB RAID-10 disk for $1,000, or a dusty old 386 PC for $50, 73% chose the server. But when offered the old dusty 386 PC for free, 69% of the people chose it over the server.
(Free junk is still junk.)
The lawyers refusing discounts in favor of pro bono look pretty rational to me.
First, they’re giving up most of their fee anyway. They’re not losing much*.
Second, they don’t want to be perceived as $30/hour people. By not charging anything, they’re expensive professionals doing pro bono (a lawyer term, and even in Latin) work. Image is important to a lawyer, probably quite important in dollar terms.
Third, they’re probably being taken more seriously pro bono. If a client pays $30/hour, they won’t take the work as seriously as if they were paying $240/hour. If it’s a high-priced lawyer waiving a fee, the work will still be seen as worth the fee.
Fourth, they’re avoiding any sense of client entitlement. A client that’s paying what looks like good money will take on a “cash customer” attitude, and feel entitled to more work if they pay the $30/hour. A client getting pro bono service will be less likely to try to push the lawyer into more service, or at least will be more understanding when the lawyer refuses. It’s easier socially to put limits on volunteering.
Fifth, there’s the already discussed matter that lawyers get significantly more soft rewards for pro bono work than discount work.
*The discussion of absolute vs. relative dollar values is applicable when we’re spending money. When we’re making money, the ratio is far more important. $100 is much more significant to the guy who needs to work twelve hours to get it than the guy who gets it in two hours. To a $240/hour lawyer, the difference between $30 and pro bono isn’t $30/hour; it’s the difference between seven and a half minutes per hour, and zero minutes per hour.
I would grab all the kisses and punch him in the face. Win!
We’re not perfectly logical Vulcans, after all.
Speak for yourself, Dr McCoy.
It is amazing how little people know that they are being manipulated.
Open Source is one example. It is ‘free’ so viewed as crap. When in reality Open Source software is often times many times better. Because, it has no price tag, people assume it is crap software.
It is the MEDIA that crame Advertising in 25% of 1 hour of your TV show, and in ALL forms of Media, most have become BRAIN WASHED.
A good sales person, that makes you feel bad for saying NO to him, gets you to buy crap you would NEVER have on your own…
Some ‘KEY’ marketing terms to look out for, while watching TV or viewing ANY Ad are the following… and it is deception at its best.
- YOU will benefit
- LIMITED TIME OFFER
- Money Back Guarantee
- Be the first 100…
- As a free gift…
- 2 for the price of 1
All of these things can be debunked as NOT added value, but simply deception tactics.
The point about whether or not to buy sometimes, is to buy it if you feel like YOU want it… not because of what the AD or sales pitch is saying… FORGET the sales pitch entirely.
Also, if it is too good to be true, than it is too good to be true and most likely a scam.
If you let your ‘feelings’ rule your choices, you will be working many extra hours slaving away because of your stupidity.
Marketing people know what YOU need… give me a break.
Changing from $1 to free is not a price reduction. If there actually are any economists baffled by the distinction, they’re not very good economists.
“Whatever you’ve heard about a brand, company, or product – there’s no substitute for your own hands-on experience. Let your own opinions guide you, not the opinions of others.”
“Once you’ve bought something, never rely on your internal judgment to assess its value, because you’re too close to it now. Ask other people what they’d pay for this service, product, or relationship. Objectively research what others pay online.”
These two seem to be exact opposites. How do you apply them both?
I think a lot of the advice you give looks good on paper but really doesn’t contribute much in the real world. For example:
- “Try comparing all the alternatives, even those from other vendors.”
- “Try to objectively measure the value of what you’re buying; don’t be tricked into measuring relative to similar products or competitors.”
- “Research these claims; don’t let marketing set your expectations. Rely on evidence and facts.”
- “Investigate whether the price is justified; never accept it at face value.”
- “Don’t fall prey to the “moneymoon”; just because you paid for something doesn’t mean it’s automatically worthwhile.”
These are all practically the same and obviously, this is what we would all do if we had the time, knowledge, and motivation to constantly do it. In the real world, however, most people don’t. I’m a computer geek and a programmer, but that doesn’t mean I can find enough insight to decide for sure whether a certain application suits my needs—and even if I did, there’s only so much time I can spend researching before the couple of dollars I could earn don’t matter anymore.
It’s easy to blame bad purchases on “predictably irrational” behavior, especially when you’re the one judging and somebody else is the one who actually has to make a decision amidst a jungle of products, with no reliable way to find out “the truth”—especially not in a reasonable amount of time.
“Thanks, Jeff, you have compressed the actual useful info from a long book, and I don’t have to read it anymore - well done (although I don’t think mr. Ariely would agree :)).”
He wouldn’t agree openly, of course, but ask yourself this: If he compressed all of his information into a four-page pamphlet or 2,000-word blog post, would he ever be able to sell it at the same price as his book?
This is specifically in regards to the example of the truffle and the kiss (or Tim’s example of the two iPods). I think what these examples show is that people make their decisions based on value (enjoyment per dollar/cent in this case) rather than price. The net enjoyment of a particular product does not change with the price.
So let’s assume a truffle has a net enjoyment of 16 (whatever that means) and the kisses have an enjoyment of 1. Now with the prices of 15 cents for the truffles the values is 16/15 = 1.07 and the value of the kiss is 1. So in this case the truffle offers a better value.
However, let’s change those prices. Now the truffle has a values of 16/14 = 1.14 and the kiss has an infinite value.
Obviously these examples are simplified as things such as time need to be taken into account and the relative enjoyment will differ per person. It does show that there may be rational thought processes behind these decisions though. Humans simply aim to maximize value rather than look at net differences.
“According to standard economic theory, the price reduction shouldn’t have lead to any behavior change, but it did.”
I don’t know what “standard economic theory” they’re using, but in actual economics we have this thing called the Law of Demand. The magnitude of the change in consumption caused by the shift from “low price” to “zero price” is certainly an oddity, but that there was some change is definitely not unexpected.
What a boring post… Sure, propably very relevant, but are you going to be a sociology professor or something?? You should talk about code and programming, not marketing…
[political]
Oy, I hesitate to go here, but this is just too inane. If you’re saying that the public option is necessarily bad because it’s free, you’re dumb. It’s not free. The public option is a public insurance program. Those who get it still have to pay premiums! The only people who will get free healthcare will be those who fall under the expanded medicaid program. If you’re making less than $14,000/yr ($30,000 for a family of 4) that’s you, and God help you, living on that. See this simple chart: http://voices.washingtonpost.com/ezra-klein/assets_c/2009/09/3907223778_1d54d0ed1f_o.html
And even that isn’t “free”. The gov’t plans to recoup the costs by rolling back Bush tax cuts on the most wealthy. See here: http://features.csmonitor.com/economyrebuild/2009/08/11/economic-scene-%E2%80%98tax-me%E2%80%99-some-rich-americans-tell-obama/
This is the equivalent of saying, “Well, our roads are free to drive on, so they must be bad!” or “The US Military defends me from invaders for free, so they must be doing a bad job!” Duh: you pay for this stuff! It’s called taxes.
[/political]
The free vs. 1 cent kiss, is not specifically about a free item, but also about the friction of paying any money at all. There is a considerable effort in paying even 1 cent but the effort is similar whether the item costs 1 cent or 15 cents. An item that is free has no such effort required, and effort also matters. There are quite a few “free” things that I pass up when “free” means I have to sign-up, or fill out something.
stopped reading at "•Scale your purchases to your needs, not your circumstances or wallet size. "
What a bullshit. Many americansspend more then their wallet allows. Seems to be typical
Stopped reading at "•Scale your purchases to your needs, not your circumstances or wallet size. "
Seems to be typical american stupidity to spend more then the wallet allows
@Shinhan: Its 73:27 and 31:69, so quite a big differnce.
And I think it’s only logical. With 1 cent, you have got to take out your purse and search for money, with 0 cents you just grab the sweet and run with it. The time you save might be worth much more than 1 cent.
I’ve always thought “free download” was hilarious (for some trial shareware or crapware). Is anyone really impressed that they are letting you download trial software for free?
Jeff: Did you implement similar reward systems on stackoverflow.com.
You can also write a blog of what you have noticed from human behavior on SO. I know once a while you mention some aspect on the podcast but a blog which consolidates your findings can be helpful.
Tim your the perfect example of how a mind is easily manipulated.
The only decision was the difference in price of 200 and yes you immediately opted for the free one even though the difference is the same. You, in your head, valued the freebie as more valuable, when it was free. That’s the trap and you fell into it like everyone else does :).
I’m not sure what is wrong with number two. Pretty much everyone want the best accomodation they can get, but they also have a fixed amount of money they are willing to spend on that. That creates a situation where adapting what you can get before you adapt what you will pay is more rational. So a bit of a bad example I’d say.