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R E S E A R C H
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| Probabilistic Purchasing Nina Mazar and Dan Ariely |
In
the traditional economic view, payment is linear, which means that paying
more is worse than paying less and the magnitude of adversity is relatively
constant (a dollar more in price is equal to X level of disutility). Yet,
multiple types of psychological observations suggest that this is not the
case. For example, a casual observation suggests that decreasing price from
$1.1 to $1.0 is very different from decreasing a price from $0.1 to $0.0;
in other words, there is something special about a $0 price. On the other hand we know that Gambling is mainly considered to be challenging, competitive, fun, and entertaining. The real monetary risks typically move very fast to the back of ones mind and make individuals spend easily a vast amount of money in order to win a game. If these two observations hold true, perhaps we should think differently about discounts? Perhaps a better type of discount will provide people with a certain probability of paying nothing and create an emotionally stimulating Las Vegas atmosphere? The current project attempts to investigate the benefits of such Probabilistic Purchasing mechanisms. |
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| Doors: Keep the options open Jiwoong Shin and Dan Ariely |
Many of the options available to decision makers can become unavailable if sufficient effort is not invested in them. The question asked here is whether the possibility that options will become unavailable in the future increases investments in these options in order to keep them from disappearing. In four experiments using a "door game," we demonstrate that such investment is resilient to information about the outcomes, to increased experience, or to the saliency of the cost. Also, we show that the mechanism underlying the tendency to keep options open is a type of aversion to loss rather than an overvaluing of flexibility. |
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| Zero Price Kristina Shampan'er and Dan Ariely |
The
main hypothesis of this study is that people overvalue things that are free. Though it is rational to prefer an object that is free to the same object when it is not free, it might not be optimal to forgo other opportunities(better goods for reasonable prices) for the only reason of getting something for free. In a series of experiments and surveys, we have established, that people do forgo these opportunities, even in the situations, where from the theory perspective, they should not. Several explanations emerged: people might get additional utility from the mere fact of getting something for free; or people might not be sure of the exact value of products to them, but be sure that these values are positive and thus choosing the free good is the only "obvious" decision; finally, people might not want to experience the disutility of choice under conflict, while choosing the free good somewhat reduces the conflict. Additional research will be carried out in order to distinguish between these three possibilities. |
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| The Goal-Driven Shopper Leonard Lee and Dan Ariely |
Conditional
rebate coupons, particularly those that require a minimum spending before a rebate or discount can be enjoyed, are pervasively used as a promotional device in today's retail marketplace. However, are they really effective, and why? In a series of field experiments, we are investigating the extent to which the effects that coupons have on consumer spending can be explained by consumers' propensity to use the coupons to set goals for how much to spend, and subsequently to complete these consumption goals that they have set for themselves. |
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Self-Deception Mike I. Norton and Dan Ariely |
Individuals
overestimate their talents compared both to their peers and to their actual
abilities, viewing themselves as better than they truly are. Such self-deception
has been explored in the aggregate (e.g., 80% of people report above average
intelligence), but little research has captured self-deception in the moment.
In a series of studies, individuals were or were not given the opportunity
to cheat on IQ tests. Those with the option to cheat performed better but deceived themselves into thinking this was due to their innate ability, and thus inflated predictions of their future performance, even when this inaccuracy led to monetary loss. Our current research investigates factors that inhibit self-deception. |
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