February 28, 2006
the price is right regardless of the cost:
Zac at ortholog.com writes about an experimental test of buying irrationality using Ebay. Quoting:
Test auctions on eBay showed that most people prefer to pay a low price for an item and also pay postage (American: "shipping") than pay a higher price and get free postage, even when the former added up to more than the latter. A CD for $5+$6 postage is preferred to a CD for $10+freepost. It wasn't presented as that stark a choice: multiple auctions with different price-postage ratios revealed a net preference for low item price and a poor correlation between auction success and stated postage costs. Interesting but hardly surprising: the salience of the price is greater than the cost of shipping (the anchoring cognitive fallacy), and people in general are not as rational or systematic as they/we believe.
(Zac's links. read the full post here)
In Influence, Cialdini highlights scarcity as one of the six principle factors of persuasion. In an auction they combine particularly strongly: scarcity of time (the item is only on sale for a limited period), scarity of product (items are sold individually, not just as one-of-many 'off the shelf') and competition (from other buyers). Add to this heady mix the price/postage sleight of hand and it is no wonder you get choice irrationalities.
