This week’s book learning is from ‘Predictably Irrational’ by Dan Ariely.
Dan was on the website of The Economist and it offered him 3 subscription options.
Internet only – $59
Print only – $125
Print + Internet – $125
He was fascinated by the options. So, he went back to Sloan and asked 100 students what they would choose. The results were 16% for ‘Internet’ only, 0% for ‘Print Only’ and 84% for the ‘Print + Internet’ option.
Now, he decided to remove the ‘Print only’ option that nobody had chosen and conducted the same poll again. And this time, the results were 68% for the internet option and 32% for the print + internet option! So, 64% had decided that the ‘Print + Internet’ option was no longer good enough!
What changed?
Nothing rational, of course. The mere presence of the ‘decoy’ and the fact that we like to make decisions based on comparisons changed everything!
So, when our real estate agent shows us 3 homes – a colonial style home with a good roof, a colonial style home with a bad roof and a contemporary, we are being nudged to choose the colonial style home with a good roof.
Similarly, high price entrées on the restaurant boost revenues for the restaurant even if nobody buys them because the second highest priced entrée sells!
Fascinating.. Do you have any examples for when this happened to you?
Here’s to keeping a watch out for ‘decoys’ when we are out buying this week!
A Learning a Day 