Predictably Irrational: The Hidden Forces That Shape our Decisions

Chapter 3 looks at how “FREE!” (56) items are “an emotional hot button—a source of irrational excitement” (56). To better understand how FREE! influences human behavior, Ariely and his colleagues conducted an experiment with Lindt truffles and Hershey’s Kisses. They first set the price of the Lindt truffle and Kiss at 15 cents and one cent, respectively. Customers chose a truffle over a Kiss, likely because they compared the quality and price of the chocolates. The researchers then wanted to see whether FREE! would change consumer choice. They altered the price, with truffles at 14 cents and the Kisses FREE! In this situation, more consumers chose Kisses than truffles.

These results suggest that conventional economic theory does not accurately explain human behavior regarding free products. According to conventional economics, the price reduction should not change consumer choice. However, marking the Kisses as FREE! did so. In fact, the commodity gained value. Behavioral economics calls this phenomenon the zero-cost effect. Ariely notes, “How strange (but predictable) we humans are!” (59).

Ariely believes the concept of FREE! entices humans to forget the downside of a purchase because FREE! entails an imagined mitigation of loss—and humans fear loss. If someone were to choose the item that is not free, they would risk a poor decision, possibly resulting in loss.