..."Dear Overcoming Bias, are there biases I can exploit to be seen as generous without actually spending lots of money?"
I'm glad to report the answer is yes! According to Hsee (1998) - in a paper entitled "Less is better: When low-value options are valued more highly than high-value options" - if you buy someone a $45 scarf, you are more likely to be seen as generous than if you buy them a $55 coat...
...What does this suggest for your holiday shopping? That if you spend $400 on a 16GB iPod Touch, your recipient sees the most expensive MP3 player. If you spend $400 on a Nintendo Wii, your recipient sees the least expensive game machine. Which is better value for the money? Ah, but that question only makes sense if you see the two side-by-side. You'll think about them side-by-side while you're shopping, but the recipient will only see what they get.
If you have a fixed amount of money to spend - and your goal is to display your friendship, rather than to actually help the recipient - you'll be better off deliberately not shopping for value. Decide how much money you want to spend on impressing the recipient, then find the most worthless object which costs that amount. The cheaper the class of objects, the more expensive a particular object will appear, given that you spend a fixed amount. Which is more memorable, a $25 shirt or a $25 candle?
Gives a whole new meaning to the Japanese custom of buying $50 melons, doesn't it? You look at that and shake your head and say "What is it with the Japanese?". And yet they get to be perceived as incredibly generous, spendthrift even, while spending only $50. You could spend $200 on a fancy dinner and not appear as wealthy as you can by spending $50 on a melon. If only there was a custom of gifting $25 toothpicks or $10 dust specks; they could get away with spending even less.
PS: If you actually use this trick, I want to know what you bought.
overcomingbias.com
One comment from that blog -
This advice on Christmas gifts will only work if you leave the price tag on, or if your recipient is sophisticated enough to recognize, say, that a particular scarf is worth $45. I once opened a package that I received in a gift-swap game that contained a (to my eyes, rather ordinary) Christmas ornament. My face must not have shown the proper appreciation, as my wife then whispered to me that this was a *very expensive* ornament. Evidently the givers had instinctively followed the "expensive junk" philosophy but the effect was nearly lost on unsophisticated me.
Posted by: David W | November 29, 2007 at 10:55 AM
-------------------
My thoughts - I wonder how much this really works. I can see that its possible that someone might, appreciate the top of the line version of a cheaper thing, rather than a bargain basement version of a normally more expensive item, if the cost is about the same and if the usefulness to the receiver is about the same. But I don't think that it works as well for useless gifts, or unusually expensive versions of dirt cheap things ($25 toothpicks or $10 dust specks) |
