Last week, we looked at how Zero (Perceived) Cost can wreak havoc on standard economic theory (briefly summarized as "What do I get?" vs. "What do I give up?" Continuing in that vein ...
Upside-Downside
When it comes to life's choices, we generally tend to weigh the pros and cons (whether objectively or subjectively, whether real or perceived). But when we are faced with the notion of getting something for nothing, something in our brains goes haywire and we will readily accept the offered item.
We also tend to think of it as more valuable than it really is, because we get it for free.
Like Jack Handey said in the old "Saturday Night Live" skit "Deep Thoughts":
"If you ever fall off the Sears Tower, just go real limp, because maybe you'll look like a dummy and people will try to catch you because, hey -- free dummy."
Why is this? Why does the idea of getting something free so entice us?
The Most-Sought-After Discount: 100%
I think part of the reason is because there is no consequence to accepting a free item -- no chance of making a bad decision, no risk of loss.
And we humans are afraid of loss. In fact, we run from it. Some sense of stability, of security, of
predictability is what we seek. We labor to tame the gods.
A real-world example: Amazon.com (
AMZN) came up with this reduced shipping deal in France where, if you bought 125 francs (about $25) worth of stuff, you could get is shipped to you for one franc (about 20 cents). This, however, did not significantly increase online sales.
Then they changed the policy to conform with most of the rest of their worldwide customers: Spend 125 francs and get FREE shipping. Sales skyrocketed.
