Phantom Cost Explained: Why People Think Freebies Are Too Good To Be True
If you’re offered a free cookie, you might say yes. But if you’re paid to eat a free cookie, would your response be the same? In our new research, twice as many people were willing to eat a cookie when they weren’t offered payment compared with when they were. From a purely economic perspective, our findings reflect irrational decision-making. Objectively, a cookie plus money is better than just a cookie. But people aren’t purely economic. They’re social animals with a tendency to look for hidden reasons behind other people’s behaviours. In the case of overly generous deals, people are expecting a “phantom cost” – one hidden in the initial offer. And this expectation influences their… Read More »Phantom Cost Explained: Why People Think Freebies Are Too Good To Be True