Tag: Behavioral

Wendy’s — Endowment of the Double Stack

 

An example of the endowment effect. The customer on the left is willing to give up a dollar but not his Double Stacker. This seems irrational as the Double Stacker only has a market value of one dollar. The endowment effect states that the possessor of a good over-values the good. This is illustrated in the commercial as the customer on the left refuses to give up his Double Stacker. For the classic coffee mug example, see Kahneman, Knetsch, and Thaler (1990).

Clip and summary provided by YouTube User chilibandito.

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Ryan Hamilton — Canceling a Gym Membership

Ryan goes through the steps he had to complete in order to cancel his gym membership. By requiring all of the additional steps to opt out of the membership, it decreases the likelihood that individuals will actually cancel their membership and instead pay the monthly fee despite not wanting the service. Ryan even discusses how he’s fallen victim to the sunk cost fallacy because he walked by his gym on the way to purchase envelopes for the letter, but he was already “in too deep” to stop by and cancel in person.

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Budlight Hitchhiker Commercial

When one party has more information about themselves than the other party, economists describe this situation as asymmetric information. We know a lot about our “true” selves, but we can use signals to send to other parties to either conceal our true selves or hide a characteristic we don’t want to reveal. In this clever Budweiser ad, the hitchhiker is trying to conceal his real intentions by carrying a case of Bud Light.

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Grey’s Anatomy — Jackson’s Inheritance

Jackson’s grandfather dies and leaves him a very large inheritance, $250 million to be exact. Jackson feels like this is a burden for personal reasons, but Maggie chimes in that it is a burden because it’s hard to know how to spend that much money. She goes through all the things he could do with it and how having that many options can be tiring. This is a classic example of the overchoice problem where consumers can become overwhelmed with options. There is small note in Maggie’s speech where she says that Jackson could buy a vineyard and never work again, which would be reflective of a pure income effect.

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Christian Finnegan — Fat Tax

Christian Finnegan knows he isn’t in the best shape so he’s decided to join a gym. He figures that at least if he never goes to the gym then he can consider the gym membership a form of fat tax. This framing adjustment could still have the same impact as working out since he now has to internalize his decision to eat unhealthy foods.

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Wanda Sykes — Wanda’s Got a Gun

Wanda moved to New York and her family told her to go out and a buy a particular type of gun, one that would end up costing her $400. Falling victim to the sunk cost fallacy, Wanda feels like if she spends $400 on a gun then she needs to make sure that it gets used, even if it means using it on friends that she invites over.

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Wanda Sykes — Being Tested

Wanda Sykes describes how she tests her husband when he doesn’t even know he’s being tested. She’s okay with a sink of dirty dishes one or two days, but if it continues for much longer than she’ll extract her revenge (later in the clip she talks about how all the fury comes out when they’re having sex). This tit-for-tat behavior where one party waits for the other one can turn into a situation where both parties are eating off of napkins and no one is cleaning anything.

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Jim Gaffigan — Birthdays

Jim Gaffigan discusses the irrationality of gift giving in this stand up special. People continue to give clothing as gifts even though the received doesn’t like the item. Gaffigan makes a good point that he would rather throw away the gift than return it because then returning it creates an errand for him.

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Old School — The Gift Frank Keeps Giving

Frank (Will Ferrell) tries to re-gift a bread make his friend Mitch (Luke Wilson), but it turns out that Mitch was actually the one to originally give the gift to Frank. Embarrassed, he accepts the gift back, but later tries to give the gift again during a child’s birthday party. One of the issues with gift giving is that most givers don’t know how the recipient values the item. In this case, Frank is stuck with a bread maker that he can’t seem to give away.

Movie: Old Schoo

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ABC 20/20 — A Test on Looks

 

A 20/20 investigation into how we subtly discriminate based on looks when it comes to donating to charity. About 1/5 people in total donated money, but requesters who were rated as better looking raised more money than the other requesters. Better looking women were able to raise twice as much money as their counterparts.

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