Demand jumps disproportionately at a price of zero, beyond what the small saving warrants.
Shampanier, Mazar and Ariely's 2007 chocolate study. Demand jumped disproportionately at zero, far beyond what the one-cent saving warranted, which is why free tiers behave unlike cheap ones.
In practice
- A £1 delivery charge suppresses more orders than adding £3 to the price of the item.
- A museum that drops a £2 admission charge more than doubles attendance, and £2 was never an obstacle worth that much.
- Standing
- Why free tiers behave differently from cheap ones.
- Subject
- Economics & Incentives
- Essay
- The regularities money obeys