

The irrationality of free - rantfoil
http://www.wiredjournal.com/?p=150

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marcell
He should have done a 3rd experiment where the kids could choose between 3
hershey's + small snickers and 2 hershey's + large snickers.

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jsdalton
This was interesting.

In the microcosm of this experiment, the choice of the free candy bar is
irrational. The kids are actually choosing between two outcomes: outcome A
which is three Hershey's kisses and small Snickers bar, and outcome B which is
two Hershey's kisses and a large Snickers bar. Outcome B is definitely better.

Interestingly, in the grand scheme of things this isn't so illogical. If, for
example, this was more like a storefront, where the kids could come and at any
time get either free small Snickers bars or large Snickers bars for one kiss,
then the former strategy is actually better.

Take this another step further and start to consider the cost of decision
making itself. Think of the mental cost of constantly processing every outcome
in search of maximum benefit and minimum cost. In the long run, applying the
heuristic of FREE = GOOD is probably the best strategy from a cost/benefit
perspective, since in most cases it does actually work.

This is a long way of saying that I think opting for free is not always
rational in the immediate context but probably makes sense as a sort of
general strategy for individuals in life.

Maybe I'm just restating the obvious but I thought I would throw this out
there.

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marvin

      Think of the mental cost of constantly processing every outcome in search 
      of maximum benefit and minimum cost.
    

That's an interesting observation... It would be extremely exciting if we
could somehow process real-world information and create programs that
calculated and displayed this kind of information to us. Humans seem to be
lousy at this, and hence there is great potential for making machines that
allow us to make more efficient decisions.

It is the same idea as applying fuzzy/probabilistic logic and rules of
interference to the real world; the main technological difficulty isn't the
logic per se, but translating information about the real world to a format we
can apply the rules of logic to. I wonder what scientific insights we need to
make before it becomes possible to do these things...it's got to be possible,
right?

~~~
pchristensen
Says the human populace: "You can bury my cold dead body before I let some
computer program make my decisions for me!"

Say businesses: "Please, we'll do anything to increase profits and ROI!"

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iamdave
Not to derail this post, but commenting on the 'allure of free' is starting to
get as tired _as_ the allure of free.

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ericb
Agreed, except there was something else in this article that was interesting.
The presence of a free alternative was alluring enough to prevent people from
making a deal they normally would make, if only for the sake of keeping the
"freeness."

In theory, this royally screws up the idealogical basis of the freemium model.
If the presence of the free option _kept_ them from entering into _any_
transaction with a cost, even if there was a clear benefit and the cost was
low, that's a problem for freemium.

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ojbyrne
Is it irrational or just people seeing beyond the boundaries of the
experiment? Once the first trade is offered, it seems like human nature to
think - "this isn't necessarily the end of the experiment - choosing the free
one is the safe choice because it's possible I might get offered the same deal
again, perhaps even multiple times, as long as I have chocolate kisses left."

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johnrob
For some reason, our brains tend to overvalue savings. I've noticed this
myself with gas prices. I am willing to go out of my way to stations that
charge 10-20 cents less per gallon. Is that really worth the trouble? At ten
gallons, this only amounts to 1-2 dollars out of 40 total. It really isn't
worth it for me, yet I feel compelled to do it.

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hugh
If it makes you feel any better, I guess you're performing a valuable service
to society. You're keeping the market working the way it should by ensuring
that stations with slightly lower prices get less business than stations with
higher prices, which helps keep the prices down for the rest of us. So in
addition to those one or two dollars of savings, you should also get the warm
glowy feeling of being a public benefactor. Congratulations!

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wallflower
Humans are irrational. Even the person who thinks themselves the most rational
will do irrational things from time to time, especially under stressful
situations.

And if you think you can always overcome mental intertia and will yourself to
do something: "Brain Scanner Can See Your Decisions Before You Make Them"
<http://news.ycombinator.com/item?id=162863>

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dimitry
Pick up Dan's book, you won't be disappointed: Predictably Irrational

I'm about halfway through and loving it.

