5. Shampanier & Ariely (2007): Zero as a special price: the true value of free products

Question 1

cognitive dissonance theory:

Answer 1

getting a zero reward can increase liking for a task compared with receiving a small positive reward

Question 2

changing a reward from something to nothing can switch motivation from

Answer 2

intrinsic to extrinsic

Question 3

when people are faced with a choice between two products, one of which is free, they

Answer 3

overreact to the free product as if zero price means also increased value

Question 4

this study: let people choose between 3

Answer 4

1) buy a low-value product (e.g. Hershey’s kiss) 2) buy a higher-value product (e.g. Lindt truffle) 3) buy nothing

Question 5

Zero price effect

Answer 5

a phenomenon associated with an increase in the intrinsic value of goods when the price is reduced to zero

Question 6

3 effects of free goods

Answer 6

free goods have an extra ‘pulling power’ - perceived more valuable than they really are
‘free’ gives us an emotional charge
‘free’ can motivate switching from high-value to low-value goods

Question 7

zero-price model:

Answer 7

the combination of the increase in the proportion of consumers choosing X and the decrease of those choosing Y when prices fall from

Question 8

Experiment 1: method and conditions

Answer 8

survey whcich one to choose 2&27, 1&26, 0&25, free switched form 40 to 90%

Question 9

experimetn 2 difference 1

Answer 9

real purchases
to test the robustness of the zero price effect

Question 10

experiment 2 condiiton

Answer 10

different candy (Hershey’s vs. Lindt)
new condition > second free condition
conditions: 0-14, 1-15, 0-10

Question 11

Experiment 2: absolute vs. relative price changes

Answer 11

hershley and lindt both dropeped 1 cent and way more people choche for hershley

Question 12

Experiment result

Answer 12

zero price effect is still there! the reduction of a price to zero is more powerful than a five-times-larger price reduction

Question 13

Experiment 3: Cafeteria - designed to control for
and how and results

Answer 13

physical transaction costs were held constant for the three choices
adding cost of the chocolate to their bill
when the Hershey’s was free, the demand increase substantially
so, strong evidence that the zero-price effect is not produced solely by transaction costs

Question 14

three possible explanations:

Answer 14

ocial norms, mapping difficulty, affect
results support the role of affect as a main cause for the effect of zero