We let our emotions get the best of us:
In a brilliant experiment from Poundstone's book, volunteers are offered a certain number of dollars out of $10. Offers seen as "unfair" ($1, let's say) activated the insula cortex, "which is otherwise triggered by pain and foul odors." When we feel like we're being ripped off, we literally feel disgusted -- even when it's a good deal. Poundstone equates this to the minibar experience. It's late, you're hungry, there's a Snickers right there, but you're so turned off by the price, that you starve yourself to avoid the feeling of being ripped off. The flip-side is that bargains literally make us feel good about ourselves. Even the most useless junk in the world is appealing if the price feels like a steal.
We're compelled by a strong sense of fairness:
I've already explained how our brains light up differently based on seeing a bargain vs. a rip-off. The shopper's brain is motivated by a sense of fairness. Again, it comes back to the idea that we don't know what things should cost, and so we use cues to tell us what we ought to pay for them. An experiment by the economist Dan Ariely tells the story beautifully. Ariely pretended he was giving a poetry recital. He told one group of students that the tickets cost money and another group that they would be paid to attend. Then he revealed to both groups that the recital was free. The first group was anxious to attend, believing they were getting something of value for free. The second group mostly declined, believing they were being forced to volunteer for the same event without compensation.
- More Here
In a brilliant experiment from Poundstone's book, volunteers are offered a certain number of dollars out of $10. Offers seen as "unfair" ($1, let's say) activated the insula cortex, "which is otherwise triggered by pain and foul odors." When we feel like we're being ripped off, we literally feel disgusted -- even when it's a good deal. Poundstone equates this to the minibar experience. It's late, you're hungry, there's a Snickers right there, but you're so turned off by the price, that you starve yourself to avoid the feeling of being ripped off. The flip-side is that bargains literally make us feel good about ourselves. Even the most useless junk in the world is appealing if the price feels like a steal.
We're compelled by a strong sense of fairness:
I've already explained how our brains light up differently based on seeing a bargain vs. a rip-off. The shopper's brain is motivated by a sense of fairness. Again, it comes back to the idea that we don't know what things should cost, and so we use cues to tell us what we ought to pay for them. An experiment by the economist Dan Ariely tells the story beautifully. Ariely pretended he was giving a poetry recital. He told one group of students that the tickets cost money and another group that they would be paid to attend. Then he revealed to both groups that the recital was free. The first group was anxious to attend, believing they were getting something of value for free. The second group mostly declined, believing they were being forced to volunteer for the same event without compensation.
- More Here
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