The price is right regardless of the postage
- The price is right regardless of the postage ››
- Test auctions on eBay showed that most people prefer to pay a low price for an item and also pay postage (American: "shipping") than pay a higher price and get free postage, even when the former added up to more than the latter. A CD for $5+$6 postage is preferred to a CD for $10+freepost. It wasn't presented as that stark a choice: multiple auctions with different price-postage ratios revealed a net preference for low item price and a poor correlation between auction success and stated postage costs. Interesting but hardly surprising: the salience of the price is greater than the cost of shipping (the anchoring cognitive fallacy), and people in general are not as rational or systematic as they/we believe. Or, as the authors put it:
This is science with real-world application: if you're selling something in online auctions in competition with similar/same products you'll do better, all else being equal, to price it low and impose a large-but-ignored shipping cost. Do this now, before everyone does it and before eBay adds another column to the listings. (via via)We show that these results can be accounted for by boundedly rational bidding behavior such as loss-aversion with separate mental accounts for different attributes of the price or disregard for shipping costs.
[Update: Tom Stafford has cross-posted this to idiolect and mindhacks.com] - [Permalink…28-Feb-06…Deserving memes……Comments (0)]
Comments
Movable Type 4.1 | 
feed (add to Google) (validate it)
| Creative Commons license | xml sitemap | xhtml1.0 | css | File under: best things in life, quest for
Post a comment
Comments are moderated so please have patience. An email address is required but won't be shown or disclosed to anyone if I can help it because I don't like spam either.