Ask Ariely: On Double Trips, Price Puzzlement, and Rationalizing Rolex
Here’s my Q&A column from the WSJ this week — and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.
I often buy a breakfast sandwich from my regular café. Sometimes, I take the empty paper wrapper, walk five meters to the trash bin, dispose of the wrapper and walk back to my seat—a perfectly convenient sequence of events. But other times, I try to throw the wrapper into the trash from my seat. I am a lousy shot, and when I (inevitably) miss, I have to make the same journey to the bin. But on these occasions, the trip feels like a chore.
Why do I feel so differently about the same journey?
The answer lies in the realm of counterfactuals. When you aim and miss, you can clearly imagine a world in which you sunk your shot, and you judge your efforts by comparison to that imagined world—and, in relative terms, feel bad about it. But when you don’t even try to hit the trash can, there is no other world to imagine and no contrast to make you feel bad.
My suggestion: Buy your sandwich and your coffee, but ask the café to serve you the coffee three minutes later. Then sit with your sandwich and try to aim the wrapper at the trash can—and, no matter how successful you are, get up and walk to the counter to pick your now-ready coffee. If you made the basket, great; if not, pick the wrapper on your way to get your coffee. This way, there is no world in which you did not have to get up after your shot, no counterfactual and no comparison. Happy breakfast.
A restaurant I recently visited had the following options on their menu:
- 10 wings for $7.99 with two sauces
- 15 wings for $12.49 with two sauces
- 20 wings for $16.49 with two sauces
- 30 wings for $24.79 with three sauces
- 50 wings for $39.79 with four sauces
Here’s what I don’t understand: Why would anyone purchase 20 wings with two sauces for $16.49 when they could purchase two 10-wing packages and receive the same amount of wings, plus two more sauces, for less money—for $15.98 instead of $16.49?
Can you help me understand this type of pricing?
Let me propose three possible theories.
My first theory is that people don’t usually engage in particularly precise calculations about price, so when we see a menu, we just get what we want without thinking much about the exact cost. On top of that, prices ending with 49 and 79 make it even less likely that people will do the math in their heads. If you could order 10 wings for 8 dollars and 20 wings for 18 dollars, the computation would be simple, and many people would realize that this makes no sense. But the price for 20 is $16.49, and people just don’t make the effort to figure it out.
A second possibility: People may just assume that there’s a quantity discount for larger purchases (which is generally true) and mindlessly apply this assumption to all cases, without comparing the prices.
And finally, the people in charge of pricing might have simply made an innocent mistake—which they might well be happy to fix the moment you point it out to them.
I am thinking about buying a Rolex watch. On one hand, I’m reluctant to buy it because it will probably be seen as symbolizing someone who thinks he’s made it. On the other hand, in all honesty, the fact that it is a status symbol is the reason I want it. If I owned one, people I meet might think, “He wears a Rolex! He must know a lot about his business, so I want to do business with him too.”
Should I buy a Rolex? And is this rational?
Of course you should. After going through such an elaborate mental exercise to explain why buying a fancy watch is such a good idea, you deserve a reward. As for whether all this is rational, you could argue that it is more than rational: It is rationalization.
See the original article in the Wall Street Journal here.