The results of the first two studies were surprising, but at the same time very reassuring. In contrast to previous behavioral research showing that consumers overreact to zero-price products, my studies demonstrate that this is not necessarily the case. When the decisions have a real impact on people’s money and the good offered is truly beneficial to them, the reaction to the decrease in price to zero (increase in demand for a zero-price good, decrease in demand for a higher-price good) seems to be explained by people perceiving a drop from 1 Cent to zero as bigger than from 15 to 14 Cents. So maybe consumers are not as ‘irrational’ as previously thought?
If consumers do not overreact to zero-price products when they are truly beneficial to them and have a real impact on their utility, it is unlikely they will do so once those products involve non-monetary costs such as collection of personal data. There is, however, a different puzzling effect that I observed in my data – many participants (35-44%) rejected both offers – they decided to do that task without any help even if it was offered to them for free. This decision had an impact on their payments – those who decided not to use any tools earned less money than those who accepted one of my offers.
This puzzling effect triggered some further questions:
- Are consumers exposed to free misleading offers, i.e., offers that are advertised as free but impose non-monetary costs on consumers?
- How prevalent are such offers? Are they easy to distinguish from truly free beneficial offers?
- Are consumers suspicious about free offers? Does this mistrust lead consumers to reject even truly beneficial free deals?
Monika Leszczyńska 