News from Mathnasium of Vaughan

The trick that makes you overspend

Aug 12, 2019

https://www.bbc.com/worklife/article/20190801-the-trick-that-makes-you-overspend?ocid=ww.social.link.email

"In his book, Predictably Irrational, Dan Ariely described how The Economist uses a decoy effect to encourage readers to opt for a more expensive subscription to its magazine. In this case, the publishers offered a digital subscription for just $59, a print subscription for $125 and a third option of a combined print and online subscription for the same price – $125. The print-only choice here is clearly a decoy, since it offers less than the print and online package for the same price, but Ariely found that its mere presence substantially increased uptake of the combined subscription (rather than the digital only). Indeed, when only two options were available, readers were 52% more likely to go for the much cheaper online-only option, compared to a choice involving a third decoy. "

It's funny (and scary?) to think that the mathematicians within us can easily fall victim to the decoy effect - despite us knowing that the math does not make sense! Even more reason to strengthen our mental math skills and have them ready-to-go, to guide us on the cheaper path ;)