Episode 3: The Power Of Free Compels You

Everyone loves free. There’s something truly magical about getting something that you value for free and the feeling seems universal.

In another post I’ll talk about why we feel indebted when we get something for free, but for now, I want to focus on the feeling of free. If we want it; we take it. It’s almost like a compulsion; a quick little burst of joy like the pure thought of a child. Here is a thing I wish to possess, and with no effort at all, I simply can possess it. Pure joy. Let me take you on a mind-journey to that feeling.

Imagine I walk up to your desk right now and place in front of you a delicate piece of your favorite candied dessert in the entire world, carefully wrapped in a small square of brown paper wrapper. It sits there perfectly. You reach down, pick it up, and eat it, savoring every second. Is it indulgent chocolate? Smooth and silky dairy crème? Lush strawberry? Fluffy sponge cake?

I encourage you to rate your feelings of joy on a scale of 1-10. Now clear your mind of that fun escape. Picture a paper clip on some sand. Okay, clear? Let’s go on another mind journey.

Imagine I walk up to your desk right now and place in front of you a delicate piece of your favorite candy in the entire world, carefully wrapped in a small square of brown paper wrapper. It sits there perfectly. I look at you and say: “Hi, I am selling this piece of candy. It’s small so I’m going to charge you $.01. If you’d like to purchase it, I only take cash. However, I see that you have a small stack of pennies on your desk so change should be no problem. Would you like to purchase it?”

Think about your decision. Would you pay a penny for the candy? How are you feeling? Are you feeling joy? Even if you did decide to purchase the candy and eat it, which would be amazing, I bet the feeling of pure joy about the transaction was lost or at least greatly diminished. If there was joy it felt different somehow. It was less pure joy and more the happiness and satisfaction of getting a good deal.

To us humans, free feels different somehow, and sure enough, it causes us to act differently too.

In Zero as a Special Price: The True Value of Free Products, a research paper by Shampanier, Mazar, and Ariely, the researchers explored different people’s reaction to encountering free with a series of clever experiments.

Subjects were given a choice between two pieces of chocolate. One was “cheap” (Hershey’s), the other was “expensive” (Lindt or Ferrero Rocher).  The experimenters played around with offering different prices to different people. Importantly, the expensive chocolate was always exactly more ($.25 more in the first experiment) than the cheap offering.

Here are the results:

The column on the left entitled “2 & 27” shows what happened when the researchers set the prices at $.02 for the Hershey’s bar and $.27 for the Ferrero Rocher. 45% chose the cheaper Hershey’s, 40% chose the more expensive Ferrero, and 15% chose nothing.

The column in the middle has the results for when the prices were $.01, and $.26. The results are about the same with a little bit of variance which is expected. The difference in price is still $.25 between the two candies.

The column on the right entitled “0 & 25” is the free condition (free and $.25). There is a huge shift when the price was free. 90% went with the free option and only 10% went for the Ferrero.

But there should be no difference between the different prices! You’re paying $.25 more for the expensive candy in any of the three conditions, and yet way more people choose the cheap candy when it is free vs. $.01. Somehow making it free makes it more valuable or desirable.

But what about transaction costs you might ask? Maybe people like free because the $.01 condition has a hidden cost; the cost of the transaction itself (aka, the pain and hassle of paying).

The researchers smartly accounted for this. They set up a real-world experiment where the chocolate choice was made at the checkout of a cafeteria. Everyone was already going to swipe their credit card. As you can see, there are similar results (although more people in the real world choose neither).

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The left column entitled “1 & 14” is the condition when both the Hershey’s and Lindt (this time) candies were not free ($.01 and $.14 respectively for a $.13 difference). Only 8% chose the cheap Hershey’s option, and 30% chose the expensive Lindt option.

The right column entitled “0 & 13” is the free condition. Again, the difference between the expensive and cheap candies is $.13. But once the cheap product is free there a huge increase in the percentage of people who choose the free candy over the more expensive candy.

In sum, in real world tests after accounting for transaction costs, the “value” of making something free is a +387% increase in sales of the free product (8% to 31% of marketshare), and a -230% decrease in sales of its competitor (30% to 13%).

So, let’s talk about some real-world implications. Do you need to destroy the subjective value of a competitor’s offering? Do you need to get a foothold in a market? Use free. And it may seem intuitive, but there’s a good reason why.

The leading theory (which is not yet proven, but makes sense) is that there is a brain science reason behind this. When you present a brain with a buy/not buy decision the brain lights up with activity. There are certain pathways in the brain that evaluate decision factors, determine preferences, and decide if you should make the purchase. Even at $.01 the neural pathways are activated in the same way as if you buy a more expensive item.

But at truly free, the brain uses an entirely different neural pathway. Instead of the “buy” neural pathway, it takes a deeper (mid-brain) pathway that involves feelings and emotions. These pathways determine if you want the item instead of if the item is valuable enough to justify a purchase.

Emotional pathways are processed more quickly. The quicker process feels like the right decision, and is easier to make, making you feel better about it.

Perhaps the “want/not want” pathways are emotionally stronger because the decision is being processed literally closer in the brain to where emotions are processed (mid-brain).

Or perhaps going through a value based buy decision drags up negative emotions because of the sadness of spending money.

Regardless of the reason, the theory is that because free is a different neurological pathway, it feels better and more valuable. Therefore, far more people choose the free item.

Thinking is hard and humans really hate doing it.

Have you seen this effect at work in your own projects? If not try it and see what happens. Again, make sure it is truly free otherwise your mileage may vary.

For example, having a price of 0, but requiring that users fill out their contact information isn’t really free. Other transactional “work” can dampen the effect. Give it a try!

 

Cite:

Shampanier, K., Mazar, N., & Ariely, D. (2007). Zero as a Special Price: The True Value of Free Products. Marketing Science26(6), 742-757. doi:10.1287/mksc.1060.0254

A Conversation With Janus Boye About Peer Learning

Logo for HumanTech podcastJanus Boye joins us from Denmark as a guest in this podcast episode to talk about peer learning. Janus facilitates groups in various locations around the world who regularly meet to talk and connect. We discuss how this type of learning is different from, and possibly better than, attending conferences to keep up your professional skills.

You can check out Janus and learn more about his peer learning groups at his website: jboye.com. 


Human Tech is a podcast at the intersection of humans, brain science, and technology. Your hosts Guthrie and Dr. Susan Weinschenk explore how behavioral and brain science affects our technologies and how technologies affect our brains.

You can subscribe to the HumanTech podcast through iTunes, Stitcher, or where ever you listen to podcasts.

All About Neuro-Marketing With Author Roger Dooley

Logo for HumanTech podcastRoger Dooley joins us as a guest in this podcast episode to talk about neuro-marketing. Roger is the author of Brainfluence, a keynote speaker, and writes several blogs. We talk about the history of neuro-marketing, how neuro-marketing can save your brand, the ethics of it all, and the new book he is working on.

You can check out Roger, his books, his speaking engagements, and his blogs by starting at rogerdooley.com


Human Tech is a podcast at the intersection of humans, brain science, and technology. Your hosts Guthrie and Dr. Susan Weinschenk explore how behavioral and brain science affects our technologies and how technologies affect our brains.

You can subscribe to the HumanTech podcast through iTunes, Stitcher, or where ever you listen to podcasts.

Episode 2: Basic Terms of Behavioral Economics

This is sort of a Part 2 of the introduction. I talk about the basic setup of Behavioral Economics, what it is, and basic terms. I’ll get back to a nice long blog post next time! But enjoy this video for now.

As proof of my bona fides I attach these notes from my masters level labor economics class. Math math math math. Also I’m sorry for my terrible handwriting :(

Thanks,
Guthrie

Why Scenarios Lead To Great Design

Logo for HumanTech podcastIn this podcast episode we give examples of how to create design scenarios and discuss why scenarios are critical to designing a great user experience.


Human Tech is a podcast at the intersection of humans, brain science, and technology. Your hosts Guthrie and Dr. Susan Weinschenk explore how behavioral and brain science affects our technologies and how technologies affect our brains.

You can subscribe to the HumanTech podcast through iTunes, Stitcher, or where ever you listen to podcasts.

Episode 1: What Is Behavioral Economics?

Hello friends,

I am planning on embarking on an epic quest, and I want you to come with me on my journey.

Have you heard of behavioral economics? It’s a very fun, interesting field of research that combines decision making, social behavior, and brain science with our everyday human actions.

I’ve been exploring the topic in-depth, and I want to bring you along to share my findings. The purpose of it all is to de-mystify why we humans do what we do. That, after all, really is the point of economics (that and lots of math).

I’ve found 100 Things That Behavioral Economics Can Tell Us About People. How you may ask? I’ve read the research papers. And not the fun “pop-sciencey” articles and books that famous behavioral economists have written. No! I’ve read the research papers behind the books. Hundreds of research papers. I’ve poured over data, figures, tables, and P, R, and T values.

From that wealth of knowledge, I collated, consolidated, and extracted the important (and statistically significant) takeaways from the research. As of this writing it’s 26481 words on 114 pages of research notes alone. And that’s just my notes; I’m just starting now to write this up in a format that you, the readers, can understand without your eyes glazing over in an econometric fog.

Some of the research is about brain mechanisms of behavior. But because we are still in the early stages of being able to see what is actually going on in the brain, most of the studies use the tried and true method of live experiments in the real world to describe and explain the sometimes strange behavior and choices we humans make.

Some of the research results are intuitive, but deserve exploring an answer as to why they are true. Some of the results are not intuitive and make us humans seem stupid. They deserve exploring an answer as well.

Finally, there are big questions about human society and the impact that behavioral economics has on it. Hopefully there are some answers that will provide clarity to those big questions as well.

To help guide you I’ll be using what I call “mind-journeys”. These are detailed narrations, where you can put yourself in the shoes of the person making a decision to help explain these complex topics.

It is going to be so fun! I hope you’ll join me. I hope I can make it to my goal of 100 things. I hope you find the information useful, and fascinating, and maybe it will explain us humans just a little bit more.

Thanks,

Guthrie Weinschenk

Mindfulness Meditation Changes The Brain

The word Mindfulness on a piece of paperI practice mindfulness meditation and am especially fascinated by the research on how a practice such as this changes the brain.
  
If you want to learn more (including a lesson about the science and the research), we’ve created a Mindfulness Meditation online video course and it’s free. You can take it either at our training website, or on Youtube:
 
The one at our website is probably the best way to take the course since it’s on a training platform, has quizzes, and so on.
 
Pass it on to anyone you know that you think would be interested.
 
And if you find it helpful perhaps write a review.

Should Game Companies Be Regulated Like Casinos?

Logo for HumanTech podcastCompanies that produce games are getting sophisticated in their use of behavioral design to get you to spend more money. In this HumanTech podcast episode we discuss whether they’ve crossed a line from video gaming to video gambling, and whether they should be regulated like the casinos are.

 


Human Tech is a podcast at the intersection of humans, brain science, and technology. Your hosts Guthrie and Dr. Susan Weinschenk explore how behavioral and brain science affects our technologies and how technologies affect our brains.

You can subscribe to the HumanTech podcast through iTunes, Stitcher, or where ever you listen to podcasts.

Flashbulb Memories: Vivid But Wrong

Logo for HumanTech podcastIn this podcast episode we talk about a type of memory called “flashbulb” — strong, vivid memories of emotionally charged events that are often inaccurate. And we discuss how collective memories might be changing as media technology changes.

(If you want to read more about memory, check out this blog post on the topic.)


Human Tech is a podcast at the intersection of humans, brain science, and technology. Your hosts Guthrie and Dr. Susan Weinschenk explore how behavioral and brain science affects our technologies and how technologies affect our brains.

You can subscribe to the HumanTech podcast through iTunes, Stitcher, or where ever you listen to podcasts.

Revisiting ALL UPPERCASE LETTERS vs. Upper And Lower Case

Picture of a sad robot faceI’m sometimes surprised by which of my blog posts people get passionate about. Take, for example, my post on whether all uppercase letters are inherently harder to read than upper and lower case. I wrote the post back in 2009, yet someone posted a comment on it today, 8 years later. And last week someone said the post was “utter BS”.

Since the all uppercase topic seems to still be hotly debated, I thought I’d write a quick update. It appears there was a research study done in 2007 that I missed when I first wrote the post. The research confirms, as I said 8 years ago, that:

  • All uppercase letters are not inherently harder to read.
  • All uppercase letters don’t slow down reading speed.
  • In fact, in this study, done with both normal vision and low vision readers, people with low vision performed BETTER with all uppercase letters, presumably because they were larger.
  • This better performance effect with all uppercase disappeared when they increased the size of the font so that it was large even in upper and lower case.
  • All uppercase letters did  not slow down the normal vision people.

It’s a small sample size, but it was statistically significant, and so far as I know there is still no research showing the opposite, so, I’m sticking to the idea for now, that all uppercase letters are not inherently harder to read.

HERE’S THE RESEARCH REFERENCE:

Aries Arditi and Jianna Cho;. Letter case and text legibility in normal and low vision. Vision Res. 2007 Sep; 47(19): 2499–2505. Published online 2007 Aug 6. doi:  10.1016/j.visres.2007.06.010