Behavioral Economics: Buying Candy Poll

[tangomonster]

Okay, so it's been over 30 years since I graduated college (that was so not fun to type), but that doesn't mean that there's no psych major left in me. I still find stuff like this intriguing, so humor me.

An article in Time reviewed a book on behavioral economics called Predictably Irrational by Dan Ariely, He describes the 'science of decision-making that unmasks the ways that emotionas, social norms, expectations and context lead us astray."

The book describes a social science experiment that went this way:

When people were asked if they would like a 15 cent Lindt truffle or 1 cent Hershey kiss, 73% noted that they would buy the truffle. When a penny was dropped off the price of each so that the truffle became 14 cents and the Hershey's kiss became free, only 31% chose the truffle.

The point of it was that "we often show bad judgment in life, like allotting too much value to things that are free."

So---since we board members are a little different from the average population, I thought it would be interesting to see whether we follow a similar pattern.

 

[Texas Proud]

Hmmmm...

I think I would have bought the kiss.... and might have spent 15 cents to buy 15 of them....

If free.... I would not have taken 15, but would have taken a 'handful'....


The data that would interest me is at what price I would have bought the truffle.... the are 'bigger' and 'better'... so there is a higher price for them

 

[cute fuzzy bunny]

I'd have bought both the truffle and the kiss both times.

 

[W2R]

I don't really know what a Lindt truffle would taste like. I have never had one though I'm sure I would find them to be heavenly.

I wish I could eat stuff like that! I probably wouldn't buy either one and I probably wouldn't take the free Hershey's kiss, either.

 

[Bestwifeever]

I'm taking the free Hershey's kiss and I'll take W2R's too since she doesn't want it (I hate to see chocolate wasted)

Why would so many more people in the original stufy choose the 15 cent truffle over the 1 cent kiss anyway? Aren't they also ascribing value based on higher price? If it costs more it must be worth more (unless the competition is completely free?)?

 

[samclem]

Wow, if 1 cent buys a kiss, I'd have brought a dollar to the party and had a ball.

. . . leaving now.

 

[ls99]

Whoa, a kiss for 0 cents is not a "buy". Though I'll take all the free kisses I can get, with a few truffles bought. From the sales girl that is. Either version of the kiss is fine. Not at all irrational!

Sounds like some academic exercise, with no bases in reality. Furthermore if you get something useful, free and you perceive value in it, all the better.

 

[Khan]

None of the above, don't eat sugar/chocolate.

Suppose I could take the free one and give it away.

 

[mickeyd]

I have never heard of a Lindt truffle, but I assume that is some kind of tricked-out candy that is relatively expensive. That said, if I am going to buy only one piece of candy @ 15/14 cents vs 1/free cents, I would risk it all on the unknown fancy confection in both scenarios and leave the kiss on the tray for next guy.

Call me an adventurist willing to live on the edge.

 

[Walt34]

Not knowing what a Lindt truffle is I picked the Hershey kisses. I know I like those. I might even share one with my wife.

 

[F-One]

DW would buy the truffle both times, the Hershey's Kiss is not worth it. I on the other hand would get neither, I don't like chocolate.

 

[Goonie]

I'd buy the truffle either time, but if the kisses were free, I'd grab up some of those also! I really like truffles, and though I've had Lindt truffles, we usually go to the Russell Stover's Outlet Stores and buy theirs!

My Dad used to say "If it's free take it.....even if it's just a book of matches."

 

[Gumby]

Hershey's chocolate tastes crappy even if it's free. I would take the truffle both times.

 

[Orchidflower]

Lindt is one of my favorite brands. Truffles are my favorite chocolate treat. No decision for me: truffles it is all the way, and damn the expense! (I agree with Gumby: Hershey tastes like cheap, greasy chocolate.)

 

[DroopyDog]

My Dad used to say "If it's free take it.....even if it's just a book of matches."

This was my first reaction as well. If the kiss is free in the second case, why not take both?

But this does bring up an interesting question. Have you ever refused an item even though it was free? In American culture, it often feels like to not take something that's free (assuming it's not harmful or utterly valueless) is like leaving money on the table, even if it's not particularly useful to you.

 

[bssc]

Lindtis overrated, IMHO. I would take the kisses in both cases. A crateful in second since there is an infinite demand for a free good.

 

[chinaco]

Both items in the second scenario. Take the free one and buy th truffle.

 

[clifp]

I'll take both also. Although I'd bet box of truffles to a box of Hershey's kisses that both was not an option in the survey.


The folks on the board are lousy at following directions.

 

[Texas Proud]

This was my first reaction as well. If the kiss is free in the second case, why not take both?

But this does bring up an interesting question. Have you ever refused an item even though it was free? In American culture, it often feels like to not take something that's free (assuming it's not harmful or utterly valueless) is like leaving money on the table, even if it's not particularly useful to you.

YES... a lot of places have those red mints (and some are green).... I NEVER take them unless I know someone with me wants them.... but I don't care for them..... and a few times there are some white 'mint' that is chalky ... man it is awful stuff....

 

[Midpack]

Unfortunately your poll has two things going on at once, so the results probably won't answer your question - and the results so far seem to confirm. The other variable as you've framed it is whether the commodity is desirable or not to the consumer. If you like/value chocolate you probably went for the Lindt truffle no matter what. If you don't like/don't value chocolate you probably went for the Hershey's Kiss no matter what. You'd have to choose a commodity that everyone valued or didn't value to get at the 'free' behavior - not sure what it would be, maybe milk or some essential item. I know, TMI...

 

[Marquette]

Both chocolates are crappy. I'd go next door and pay 50 cents for a real truffle.

Life is too short for crappy chocolate.

 

[cute fuzzy bunny]

The folks on the board are lousy at following directions.

If we followed directions, we'd keep working until we were 67

 

[NotReady4Purple]

I do know what a Lindt truffle is and it is far better than a Hershey's kiss. I think that a penny for a Hershey's kiss is about right - but $.14 or $.15 for a Lindt truffle is a very good bargain. I'll take the truffles in both cases,

 

[Moemg]

I'd pass on both . I don't like candy or dessert .

 

[Marquette]

Two answers...

First:

I shop for the best value to fulfill a given need. It's too simplistic to compare a truffle to a kiss. Nominally, they're both chocolate, but they deliver a rather different taste experience in both cases. So, if I were in the market for a truffle, then I would go for the truffle both times.

On the other hand, if I simply needed a quick chocolate fix, then I would go with the kiss both times.


Second:

I did some quick comparison shopping... I need to do some more, but this is just what was convenient for me. The grocery store carried Lindt bars but no truffles. However, they did have bags of kisses. The price per kiss worked out to roughly 3.45 cents. 1 cent is a fantastic deal if your intrinsic valuation if kisses hovers close to the market value of 3.45 cents.

The company store is selling Lindt truffels for 40 cents each. Again, 15 or 14 cents is a fantastic deal.

Given that, I would buy the kisses at a cent and take a long straddle on the truffles for August and September calls. Given a market price as high as 40 cents and as low as 14 cents with a 1-day swing of 1 cent, the option to cash in on the volatility is a pretty good bet. Plus, it should be pretty easy to mark up the kisses 100% and still get a buyer on the chocolate spot market.