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The article makes some pretty compelling points, but I think it's underestimating the irrationality in human behavior. It's well known that people's purchasing
by whack 9y ago
The article makes some pretty compelling points, but I think it's underestimating the irrationality in human behavior. It's well known that people's purchasing habits are deeply irrational on many levels - one of which is the idea of anchoring. We've had the idea of $4 coffee prices anchored in our heads, and so, don't think twice about it. Conversely, we've also had the idea of free-apps anchored in our heads, and so, feel deeply averse to spending $1 on it, even when a rational person would conclude that the app's lifetime value (over free alternatives) exceeds 25% of the value provided by a single cup of coffee.
There are certainly many rational reasons for why someone wouldn't want to pay a buck for an app, but it's worth pointing out that a significant number of people are irrationally averse as well.
http://www.investopedia.com/university/behavioral_finance/behavioral4.asp http://www.investopedia.com/university/behavioral_finance/be...
- daxfohl 9y agoYeah, I can't tell you how many irrational hours I've gone out of my way to avoid toll roads or paid parking, things that "should be" free, even now when I certainly charge many times the rate that any parking garage does.
- cortesoft 9y agoI think it is a bit unfair to call anchoring 'irrational'. It is a heuristic for figuring out how much I should pay for something, and it works pretty well for a lot of situations. Sure, it can be exploited by people who know what they are doing, and it can lead us to pay too much sometimes or refuse to pay a fair amount other times, but on the whole it works pretty well.