The Strange Effects of Free Stuff

By Rick Paulas – The introduction of free throws off how we normally process decisions.

“It only implies benefits and no costs,” says Juan Nicolau, a professor of economics at the University of Alicante. “While another offer with a positive price, no matter how small it is, always conveys both benefits and costs.”

“When people are offered something for free, they have this extreme positive reaction that clouds their judgment.”

This phenomenon is called the Zero Price Effect. Much of our knowledge on how free tricks our brains comes from a series of experiments conducted in the mid-aughts by Kristina Shampanier [2], Dan Ariely [2], and Nina Mazar [2], while they were all based at MIT’s marketing department. more>

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