November 4, 2008

...Learn TDD with Codemanship

Predictably Irrational On Holiday (Again)

It's holiday season again.

Not yours. Just me.

This year I'm in Cyprus in a lovely and extremely English resort called Coral Bay. I've rented a villa about 100 metres from the beach and about half a mile from the main strip where they keep all the really touristy stuff and less law-abiding folk can buy very dodgy DVDs of films that are still in the cinemas back home (and, in some cases, haven't even been made yet).

Life can be hell sometimes

As usual, the villa has a decent-sized pool and I start each morning sipping coffee and eating a delicious continental breakfast on the terrace, wondering what it would be like to actually get into the pool and do a few lengths.

Of course, as the day wears on and the sun wears me down, I end up jumping in the pool to cool down. Well, it's a sort of exercise.

And, lets not forget, swimming pools are great for lying next to with a good book and a large glass of gin and tonic with about half a tonne of ice. (Note to villa owners- ICE TRAYS!!!)

Talking of books, right now I'm reading a book called Predictably Irrational, which is all about the wierd forces that drive us to make irrational decisions. Not randomly irrational, I should stress. Predictably irrational. It's about how we tend to be irrational in the same ways, and how this irrational behaviour can be exploited (or overcome).

Take, for example, the way we behave when we're offered things for free. Or should I say FREE!. The author cites an experiment he did where he set up a stall offering two kinds of chocolate to students on a college campus.

For 15c, they could have a delicious Lindt chocolate truffle. Or for 1c they could have a bog-standard Hershey's Kiss. At those prices, most of the students opted for the truffle because it was such a bargain price for a such lovely chocolate. I think about 70% went for the truffle and 30% went for the Kiss.

Then they dropped both prices by 1c, so now a truffle cost 14c and the Hershey's Kisses were free (sorry, FREE!) Even though, relatively speaking, the Lindt chocolate truffle was still the best bargain (measured as the net benefit of the joy of taste minus the pain of cost, if you like), now 70% opted for the Kiss.

There was another example of this effect where Amazon were offering FREE! shipping orders over a certain value, and this was spurring customers to actually spend more - much more than the cost of the shipping. Except in one country, where they offered shipping for about 20c, which is near enough to nothing as makes little difference, you might think. But in this country, sales didn't go up. Not until they changed it from 20c to FREE!, and then sales improved similarly to the way they had in other countries that offered FREE! shipping.

There are lots of other really fascinating insights into irrational behaviour - and especially irrational consumer behaviour. Like the way that customers find it easier to spend money on a product or service if there's a less good value option to compare it to.

Send out a flier offering to print 500 colour business cards for $50 and people won't know whether that represents value for money or not and you'll get fewer orders. Send out a fier with a choice of 500 for $50 or 250 for $45 and all of sudden they have a benchmark for value and you will mysteriously get more orders for the $50 option.

Look at the offers you've taken up recently and ask yourself if you've behaved entirely ratinally, or have you been manipulated by salespeople who know which buttons to press?

Fascinating stuff.

Now where did I put my glass?

Posted 1 week, 3 days ago on November 4, 2008