Awhile ago, we reported a study that found when offered two deals on loose coffee beans: 33% extra free or 33% off the price, shoppers almost invariably picked the “extra free” option.
Wrong answer.
Most shoppers considered the offers equivalent although the discount is by far the better proposition … it would take a 50% increase in the “free” quantity for the offers to be equivalent.
The researchers concluded that
Shoppers are generally bad at math … and easily succumb to the “power of free”.
More generally, consumers are notoriously bad at spotting real values.
According to the Atlantic ….
- First: Consumers don’t know what the heck anything should cost, so we rely on parts of our brains that aren’t strictly quantitative.
- Second: Although humans spend in numbered dollars, we make decisions based on clues and half-thinking that amount to innumeracy.
More specifically, here are some more ways consumers end up paying too much …
The Homa Files 