A group of researchers offered participants of a study a choice between purchasing a Hershey ’s Kiss chocolate for 1-cent ($0.01) or Lindt Lindor chocolate truffle for 15 cents ($0.15). The participants, recognizing this as a good deal since the price differential in a supermarket would be larger than 14 cents between the two options, overwhelmingly chose the latter.
Now here is where it gets interesting.
The researchers dropped the price of each product by a penny. Logically, the Lindt Lindor chocolate truffle should still be the preferred choice, since there is still just a 14 cent difference between the two products. If the participants originally thought the Lindt Lindor was worth the extra 14 cents, then they should still choose the truffle over the Kiss.
However, in the revised scenario, an overwhelming majority chose the Hershey Kiss.
Apparently, we just love the word “FREE”. It evokes unreasonably positive feelings in the brain. Just the sight of the word “free” releases large quantities of dopamine in our brain to make us feel happy, and we end up responding irrationally.
FREE. FREE. FREE. FREE. FREE.
So how does this affect us in the real world? Consider two economically identical deals– one messaged as ‘buy 1 get 1 free’; the other messaged as a volume discount deal as ‘get 50% off if you buy two’. Which one are you more likely to respond to?
Here’s another example, from Dan Ariely:
Most of us would never purchase a low-quality, ill-fitting t-shirt at a store for $15. But when that same t-shirt is free, launched from a cannon at the ballpark, we’re willing to break bones and spill $12 beers to get our grubby hands on it. “The moment something involves ‘free,’ we get overly excited,” explains Ariely, “and we no longer think rationally.”