Why Internet Deals Makes You Act All Irrational

Pretend I sent you an email saying the following: “At some point today, stop what you’re doing for 90 seconds and sit in front of your computer. Just 90 seconds. If you do this before the end of the day—whenever you’ve got a free moment—I’ll give you $20. No joke. I’ll send you the cash the instant you hit second 90.”

You’d probably start counting to 90 right then. No one in their right mind would turn down an offer like that.

Yet a few weeks ago I sent an email to about forty friends and only one of them took me up on the offer. Just one person out of forty was willing to take 90 seconds to earn $20.

Okay, that’s not exactly true. What I emailed was a promotion from Fandango: a voucher for two movie tickets for $9. No strings attached. No survey to fill out. No weird conditions. Businesses occasionally do extreme customer engagement promotions—Starbucks has free coffee days, Ben and Jerry’s gives out a free cone on their birthday—and this was one of them.

If you’re doing the math, you’ll realize that this is about a $20 dollar savings over typical movie prices ($12-15). To complete this deal would have taken everyone about 90 seconds of entering personal and payment details. The only rational reason you wouldn’t take the time was 1) you never go to the movies or 2) you were involved in some sort of medical emergency. Otherwise, no one in their right mind would shirk $20 for 90 seconds of their time.

So why didn’t everyone jump at the chance?

Jonah Lehrer of Wired wrote an interesting article about this quirk of perception a few months ago. Economists call the phenomenon “mental accounting.” Our brains tend to think of numbers and financials in buckets of social context, not necessarily for the raw values they indicate. The decisions that mental accounting produces tends to throw cold water on the bedrock economic notion of “rational behavior” and probably means the rule should read, “people always behave in a manner they perceive to be rational and in their best interests.”

Richard Thayer, a University of Chicago economist, strangely, did another movie theater experiment.

Imagine that you have decided to see a movie and have paid the admission price of $10 per ticket. As you enter the theater, you discover that you have lost the ticket. The seat was not marked, and the ticket cannot be recovered. Would you pay $10 for another ticket?”

So, would you? 46% of his respondents said they would.

But then Thayer asked:

“Imagine that you have decided to see a movie where admission is $10 per ticket. As you enter the theater, you discover that you have lost a $10 bill. Would you still pay $10 for a ticket to the movie?”

Now 88% of respondents said they would.

But in either scenario, you’re out an extra $10 on a night you wanted to see a movie. Why would roughly twice as many people be okay with the second scenario and not the first?

Strangely, our brain constructs finances and numbers by association. The first scenario is viewed as paying $20 for a movie ticket. The second scenario is viewed as losing $10 bucks and then buying a $10 movie ticket. The latter situation sucks, we say, but oh well, the movie still costs the same.

So why didn’t anyone take up the Fandango offer I sent around? Maybe a couple people didn’t check their email that day, perhaps a few thought it was some sort of scam or just hate Fandango, but those that read the message likely—subconsciously—thought, “I’m at work/busy/on the run and I don’t have time to get out my credit card or think about the movies. And, honestly, I don’t really feel like spending $9 right now.”

Delete.

But if I’d said, “Stop what you’re doing for 90 seconds and I’ll give you $20!”

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