A show on the National Geographic Channel called Brain Games has a good track record of exploring and explaining how our brains work, especially in every day circumstances. It’s probable that a good deal of why they work how they do has an evolutionary basis, but it’s also likely that some of their operation is simply incidental, an accident of our emergence from the jungles to the savannah to civilization.
One of my favorite episodes is called “Power of Persuasion”. It’s all about how marketers and advertisers get you to think what they want you to think. The show conducted an experiment (for which there was already ample, controlled evidence) where they sold popcorn to unsuspecting movie-goers. The first set of movie-goers was given a choice between a $3 small bucket and a $7 large bucket. Even when prodded to go for the more expensive choice, most people chose the $3 bucket. When interviewed later, people said they felt like $7 was way too much, and besides, the smaller bucket was more than enough anyway. The second set of movie-goers, however, was given a different set of choices. In addition to the $3 and $7 buckets, they had the option of a $6.50 medium bucket. Many of the patrons chose the medium bucket. When they did, the person behind the counter asked if they wanted to upgrade to the $7 bucket. After all, it was only another 50 cents. A significant percentage of people took the bait, purchasing the large bucket. In their interviews, they said it seemed like they were getting a better deal. Even while making the purchase, some could be heard saying, “Well, it’s only another 50 cents.” People believed they were getting a better deal.
What underlies this exercise is that an extra data point was introduced. In the first scenario the information was limited. Regardless of the price per ounce (which wasn’t given), the $7 bucket was well over twice the price of the small, but it certainly didn’t appear to be twice as big. The perception of the large bucket’s value was low. However, people in the second scenario had a third data point. The small bucket may have still been the best deal, but the $6.50 bucket normalized the prices on the higher end. The $7 bucket’s price was still over twice the price of the small bucket, but it was relatively close in price to the medium bucket; two of the choices had similar prices, so the highest price no longer seemed so extreme. Then when given the choice to spend a relatively small amount more (50 cents), the most expensive bucket seemed like a downright deal.
Now think to all the times you’ve done this. When you look into buying an item, are you only looking at the quality? Or are you looking at the value you’re getting? How often have we all opted to buy the medium-priced item because we don’t want something cheap, but the highest priced items are too much? And how often have we allowed ourselves to spend just a little more because the next product level was so close to what we were willing to spend on a slightly inferior item? I don’t know about you, but I think about this every time an employee at my local cafe asks if I want to upgrade from a medium to a large for just another 30 cents. It seems like a good deal, and maybe it is, but do I actually want more chai tea or do I just want more value?