Something offered at a discount and something offered for free occupy different places in our minds.
In a normal purchasing decision—even when the price is steeply discounted—we think about the upside and the downside of the transaction. When something is free, we ignore the downside.
Free causes us to overvalue something, and to ignore the indirect costs.
People will spend hours waiting in long lines, put up with the inconvenience of heavy crowds, or purchase a different product they don’t need to get a free gift they never would have purchased anyway.
We are not nearly as rational as we think we are. Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely offers a fascinating look at how and why we behave the way we do. By understanding the motivations and triggers behind the choices we make, we can better predict the decisions made by our customers and by ourselves.
