Monday, July 21, 2008

Predictably Irrational

I really enjoyed this talk by Dan Ariely (author of Predictably Irrational). The most interesting part to me starts at the 25:30 mark, where he discusses how an unattractive third option can influence people's choices between two better options. The example he uses is a subscription offer from the Economist:
  • Online-only subscription for $59
  • Print-only subscription for $125
  • Print and online subscription for $125
Since the print and web combination is the same price as the print subscription alone, no one chose the print-only option. However, when the print-only option was present 84% opted for the print/web combination, compared to only 32% when that option was removed. It's counterintuitive, but I've noticed myself doing the same thing. When you're making objective comparisions between different kinds of apples, it's tempting to leave oranges out of the picture entirely.

[via Reza]