Choosing between Apple iPhone 6 and iPhone 6 plus..insights from beh eco

Cass Sunstein points to this really interesting insights from the field he knows best – behavioral economics.

He says people make different choices when buying a product standalone vs buying it in combination:

If you’re getting a new iPhone (because you’re not bothered by the possibility it might bend), will you select the iPhone 6 or the iPhone 6 Plus? A lot of people have been getting the latter, because it has a bigger screen, more pixels and better battery life. But before you join them, please take a deep breath. You might be making one of the most important, if least known, decision-making mistakes in all of behavioral science.

To understand the mistake, consider this scenario: You are in the market for a second-hand music dictionary, and your options are 1) one with 10,000 words and an intact cover or 2) one with 20,000 words and a torn cover. Most people choose 2, because they care less about a dictionary’s cover than about whether it has a lot of words.

That’s sensible enough, but here’s the puzzle. When people evaluate the two dictionaries separately, and some are asked how much they would pay for 1, while others are asked how much they would pay for 2, it turns out that people will pay significantly more for 1.

In evaluating both dictionaries at once, in other words, people favor the dictionary with more words. In evaluating the books separately, they clearly favor the one with the intact cover.

🙂 He gives a similar example from a CD changer.

Marketers exploit this well:

Some product characteristics are hard to evaluate in the abstract, and so we don’t pay a lot of attention to them when looking at a product on its own. Unless you are a specialist, you are unlikely to know whether a music dictionary should have 10,000 words or 20,000 words, or whether a total harmonic distortion of .01 percent is good or lousy. But in joint evaluation, you are able to make a comparison, so you can focus directly on characteristics to which you would otherwise pay little attention.

Clever marketers know this. To sell you their product, they pair it with another one that is clearly inferior along a dimension you care about. A seller who wants to persuade people to buy a computer puts it next to another one whose screen has a lot fewer pixels.

For consumers, joint evaluation is often best. It’s good for dictionaries to have a lot of words and for CD players to have terrific sound quality, and joint evaluation helps people make comparisons. In separate evaluation, who knows the meaning of the phrase “1136-by-640-pixel resolution at 326 ppi”?

But for consumers it leads to issues. Often products are picked whose features are not used or become irritating overtime:

But joint evaluation can also lead people badly astray, at least when it makes them fixate on an attribute that doesn’t much matter in their actual experience of a product. After all, most people tend to use their goods — dictionaries, CD players, smartphones — separately and without making constant comparisons. As Hsee explains, you might choose a pair of ugly loudspeakers with terrific sound quality over a beautiful set with slightly worse sound quality. Once you’re home, though, you might not even notice the difference in sound, but end up unhappy that the speakers are so ugly.

Which brings us to the new iPhones. In joint evaluation, the 6 Plus has many advantages — more pixels, a better camera, a bigger screen. But for many consumers, those things won’t much matter in actual experience. In separate evaluation, and in actual use, the pixels, the camera and the screen on the iPhone 6 are more than fine.

Of course, different people have different tastes and needs; you might choose one phone over the other because bigger really is better (or worse) to you, or because battery life is what matters most. No one doubts comparison-shopping is a good idea. The mistake, to which all of us are prone, is to focus on a characteristic that stands out inside the store — but matters hardly at all in daily life.

 So be careful. But then we are predicatbly irrational too. Expect to make the same mistakes despite knowing the tricks..

 

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