Warning: consumers smarter than they appear
For years, researchers and psychiatrists and psychologists have been performing studies to show that we consumers aren't a very bright bunch.
How they loved to laugh when subjects were all given the same wine but told it cost different amounts and, surprise, the price affected what people thought of it. Or when people were able to resist more pain because they believed the pill they were taking (a placebo) was more expensive.
But researchers are aware of a laboratory effect that makes people act differently -- i.e. most people don't drink wine while being monitored by a two-way mirror -- so they skew their results. Now, consumers may have the last laugh.
That's because two Israeli scientists decided to take long-standing studies about user choices into the actual marketplace.
It's been restaurant-marketing dogma for years that small price differences affect people's choices but to the researchers' surprise, it didn't work. Customers ordered what they liked regardless of a dollar or two difference. Nor did the experiment work when applied to candies.
That challenge was undertaken at an upscale restaurant in Tel Aviv by two behavioral economists, Ori Heffetz of Cornell and Moses Shayo of the Hebrew University of Jerusalem, who expected to be able to manipulate diners' choices by changing the prices on the menu. Unbeknownst to the diners or to their waiters, the economists monitored the choices of people who ordered from the prix-fixe menu.
Superficially, the manipulation seemed to work, because people said they would be willing to pay more for a candy if it had a higher sticker price, but that was just in answer to a hypothetical question. When people were given a chance to pick a bag of candy to take home, they pretty much ignored the sticker prices and chose what they liked.Although a study may show that people more often buy a candy that costs $1 versus a candy that costs $50, in reality, the $50 candy would have never made it to the marketplace. As the economists say, "in real-world settings prices can't be inflated so extremely."
As Oscar Wilde once said, "The more one analyzes people, the more all reasons for analysis disappear."
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