Is It Really Irrational To Choose Free! ?

“We all get a bit too excited when something is free! And that consequently, we can make decisions that are not in our best interest,” said Dan Ariely in his book named Predictably Irrational

Ariely gave an example of an Amazon gift card. He let people choose between a $10 gift card for free and a $20 gift card for 7 dollars. Based on the result he concludes that most people would choose a $10 free gift card even the other choice had a $13 dollars actual value. Thus, he pointed out that people are intrigued with the idea of free!

However, I doubt his outcome because I would prefer to choose the 20 dollars gift card. My idea is that people are rational when they choose something free. It depends on what kind of “free” it is. Then I designed an experiment based on this concept and the result deviated from Ariely’s.

Experiment #1

I randomly polled 40 people on the street and separate them to four groups: Victoria’s Secret fans, not Victoria’s Secret fans, Nike fans, and not Nike fans. Then, I asked them to make a decision between a free 10 dollars gift card and the purchase of a 20 dollars gift card for seven dollars.

Table and Outcome

In the group of Victoria’s Secret fans, 7 out of 10 people choose the 20 dollar gift card for seven dollars option, while 8 out of 10 people choose the $10 free gift card in the group of not Victoria’s secret fans.

Similarly, in the group of Nike fans, 9 out of 10 people choose the 20 dollars gift card option. In the group of not Nike fans, 5 people choose the free gift card and 5 choose the 20 dollar gift card.

Thus, the result deviates from Ariely’s. My experiment’s result illustrates that people are rational whether they decide to choose free or to purchase the item. Based on the result of the test, we can see that most people are willing to buy a 20 dollars gift card for their favorite brands. The reason for this is that they know that they will probably buy in the future. By contrast, people tend to choose the free gift card for seldom consider brands. They are not sure whether or not they will buy it in the future so that a free gift card makes more sense.

Even more, during my interview, a man who was obviously not a fan of Victoria’s Secret said he would choose the 20 dollars gift card just in case he will use it in future. “I get more with the 20 dollars gift card, I could probably sell it to others,” he jokes.

Experiment #2

I designed another experiment based on Ariely’s conclusion that free shipping matters because he believes that people would buy more once the merchant provides free shipping.

Again, my own experiment showed different results. I randomly interviewed 15 people on the street asking them the following question:

Does free shipping matter?

A: Yes, will buy other necessities.

If yes, will you accept the charges for shipping if no necessities can buy?

Yes->C

No ->B

B: Yes, will buy whatever products to meet the free shipping.

C: No, it doesn’t matter.

D: Depends

Outcomes

Not very surprising that five people choose B. However, the reason of their choice surprised me. I interviewed two people who choose B. They said that they would return some unnecessary product back to the store later, hence they could get both the free shipping and the products they need.

For the remaining 10 people, four chose “free shipping doesn’t matter,” and six chose “depends on how much I need to pay.” How can we say that people are irrational when free shipping is introduced?

Finally, Ariely’s idea that people are blinded when their choice involves “free” has been overturned by my experiments. I am not saying people are rational at all, but in some aspects, we can’t ignore how smart and rational people are.