psychology of zero
Nov. 25th, 2013 06:18 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
109In India, unlike Greece, algebra was separate from geometry, infinity and void appeared within the same system of beliefs (i.e., destruction, purity, and new beginnings), and the concept of zero flourished.
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Cognitive dissonance theory (Festinger and Carlsmith 1959) shows that getting a zero reward can increase liking for the task compared with receiving a small positive reward.
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Related to these findings on motivation and incomplete contracts, it has also been shown that when prices are mentioned, people apply market norms, but when prices are not mentioned (i.e., the price effectively is zero), they apply social norms to determine their choices and effort.
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When Ben and Jerry’s offer free ice-cream cones, or Starbucks offers free coffee, many people spend hours in line waiting to get the free item, which they could buy on a different day for two to three dollars. At first glance, it might not be surprising that the demand for a good is very high when the price is very low (zero), but the extent of the effect is intuitively too large to be explained by this simple economic argument.
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In a series of experiments, we demonstrate that when people are faced with a choice between two products, one of which is free, they overreact to the free product as if zero price meant not only a low cost of buying the product but also its increased valuation.
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http://web.mit.edu/ariely/www/MIT/Papers/zero.pdf
***
Cognitive dissonance theory (Festinger and Carlsmith 1959) shows that getting a zero reward can increase liking for the task compared with receiving a small positive reward.
***
Related to these findings on motivation and incomplete contracts, it has also been shown that when prices are mentioned, people apply market norms, but when prices are not mentioned (i.e., the price effectively is zero), they apply social norms to determine their choices and effort.
***
When Ben and Jerry’s offer free ice-cream cones, or Starbucks offers free coffee, many people spend hours in line waiting to get the free item, which they could buy on a different day for two to three dollars. At first glance, it might not be surprising that the demand for a good is very high when the price is very low (zero), but the extent of the effect is intuitively too large to be explained by this simple economic argument.
***
In a series of experiments, we demonstrate that when people are faced with a choice between two products, one of which is free, they overreact to the free product as if zero price meant not only a low cost of buying the product but also its increased valuation.
***
http://web.mit.edu/ariely/www/MIT/Papers/zero.pdf