Irrational decisions – the psychology of shopping


We make countless number of decisions during our life. Some of them are easy, other are more difficult and we’ve to think a longer time before we choose the best option. Most of us think that their decisions are right and rational, and when we make them we use common sense and situation analysis. However, is it really true? Here are some examples:

1.Chocolate vs. making decisions

There was an experiment. People were given 2 types of chocolates (of well-known companies).
First time, chocolates No.1 were offered for 1$ (luxury ones), and chocolates No.2 for 10 cents (from a discount store). Second time, the same chocolates No.1 were offered for 1$, and chocolates No.2 for free.
In the first case chocolates No.1 were chosen by 73% of examined people, and in the second only by 31%.
Why? It’s a magic of expression ‘for free’. It’s based on our emotions – we perceive a particular offer as more attractive than it really is.

2. Does a free service make any sense?

AARP organization asked lawyers if they would be willing to offer cheaper legal services for pensioners for 30$ per hour. Most of them refused. However when they were asked if they could offer free legal services for pensioners in need, then most of them agreed.

The same mechanism will work when we ask somebody for help. When we don’t offer payment more people will agree to help than when we offer a small amount of money.

Why is it so? When it comes to making decision and we use financial issues (market norms) then social norms disappear. We preferably help people when it results from social ties and not economic ones.

Irrational decisions

3. Coffee – drink of the gods? Why is it so expensive?

How much are we able to pay for coffee? Of course it depends on its quality: strength, aroma, taste…
There was an experiment. Two groups of people were given the same coffee. One group in plastic cups and the other in luxury cups. As we can guess, the second group said that they had high quality coffee and they were willing to pay more for it.

The similiar results appeared during painkillers testing. When the group was given placebo and said that it was an expensive pill ( 2$ a piece),  most of people felt relief in pain. However when they were said that the pill cost 10 cents a piece, only less than half of people felt relief.

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We can multiply examples. Behavioral economics is trying to understand how we really act and how we make decisions. Unfortunately it’s widely used by companies which promote their products.

So are we completely helpless? No. We should realise that our impressions and opinions may result from companies manipulations and their aim is to sell us a particular product.  So first of all we should remember that most of opinions are subjective and almost nobody is able to tell the difference between Coca Cola and Pepsi 🙂