What Aryabhatta didn’t think of, when he invented zero, is the delightful connotation it would impose on us consumers. In his book, ‘Predictably Irrational’, Dan Ariely explains how we constantly seek out that something for nothing. But this comes with hidden costs that go on to prove that there is no such thing as a rational consumer.
Ariely conducted a simple experiment where he set up a stall selling two types of chocolates. One pile consisted of Lindt truffles which cost 30 cents apiece and the second pile consisted of Hershey kisses which cost 2 cents apiece. He priced the Lindt at 15 cents and the Hershey’s at 1 cent. 73% of the people went for the superior Lindt.
He then knocked off a cent from each of the chocolates. The Lindt, now priced at 14 cents, should still have been preferred in an absolute sense. But the Hershey’s, which were now free, went on to acquire 69% of the sales.
This appeal of freebies can blind us onto bad decisions. We buy the more expensive car because it comes with a free oil change. People start assuming that zero-calorie colas correspond to a healthier lifestyle. Such is the allure of FREE!
IRIANS – The Neuroscience Institute