How Much Is The Cost Of Zero Cost?

1119 Words Dec 1st, 2016 5 Pages
How Much is the Cost of Zero Cost?
To a neo-classical economist zero is just another price. To the average coustemer it brings to the mind the word of free. We are always trying to get something for nothing so if something is free then consumers impulsively take the option. Ariely shows how this impulse comes with hidden costs that debunk the myth of rational consumers. Whether it’s from eating too much free food or accumulating worthless free pens, clickers etc, people are always trying to get a free lunch.
As usual (this is what is so great about the book) Ariely did an experiment to find the answer. He set up a stall with offering two piles of chocolates, the first being Lindt truffles and the second being Hershey kisses. He sold the Lindt for 15 cent and the Hershey for 1 cent. Due to their superior quality 73% choose Lindt and 27% chose Hershey’s. So far, so good. An economist would say that Lindt was obviously a superior product and as the benefit from it outweighed its cost better than Hershey did, it sold better. So Ariely knocked one cent off the price of each chocolate, so that the Lindt truffle cost 14 cent and the Hershey kiss was free . If Lindt was a superior product then it should hold its place as its relative price hadn’t changed, it still cost 14 cent more than Hershey. Sure the proportions had changed, but one cent is the same amount in your pocket regardless of proportions. You don’t buy goods in proportions; you buy them in absolute amounts. Any…
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