Evaluability (And Cheap Holiday Shopping)

Ouch, don't the units in that diagram hurt your brain? (Yeah, I understand what it means and it does make sense, but it looks soooo wrong. Especially in my part of the world where an ounce is a unit of mass or weight, not of volume.)

I think you can use this logic to explain why movie theaters sell small, medium, large, and extra large popcorn for $5, $6, $7, and $8 respectively. With the less attractive options priced relatively high, people are more likely to pay the unreasonable price of $8 for the extra large.

Hmmm...

29/36 $2.00 = $1.61 7/36 $9.00 = $1.75

While the average prices (equivalence values) placed on these options were $1.25 and $2.11 respectively

I guess people don't carry calculators with them?

The math is easy if you just ignore the /36 which is the same in both casts. 2*29=58 and 7*9 = 63. No calculator required.

I bought my brother a huge gold buttplug for $250 (top of the line) rather than a medium range coat from The North Face.

"2*29=58 and 7*9 = 63. No calculator required."

Maybe for you.

I suggest tumbleweeds.

"Naturally, those so-called "lotteries" were a failure. They had no moral force whatsoever; they appealed not to all a man's faculties, but only to his hopefulness. Public indifference soon meant that the merchants who had founded these venal lotteries began to lose money. Someone tried something new: including among the list of lucky numbers a few unlucky draws. This innovation meant that those who bought those numbered rectangles now had a twofold chance: they might win a sum of money or they might be required to pay a fine--sometimes a considerable one. As one might expect, that small risk (for every thirty "good" numbers there was one ill-omened one) piqued the public's interest. Babylonians flocked to buy tickets."

-Jorge Luis Borges, The Lottery in Babylon.

Long ago I was discussing this passage with a friend trained in economics (I am not). He insisted that is was silly and that people would never prefer deliberately the option with added penalties for losing. Glad to see he was wrong!

When buying $10 dust specks, do not get carried away and buy 3^^^3 of them. You won't save any money that way.

But don't forget the main lesson of the economics of present giving: "It's the thought that counts". If you can find a €40 item that seems personalised and full of meaning, it's valued much more than the €50 bottle of mindless perfume.

Of course, it's much easier to be considerate if you know the person well. The closer you are, the more you know their preferences, and the more they will value your consideration. So be cheap and attentive to those closest to you, moving up to spendthrift and indifferent for strangers...

(that actually is my pattern of spending - are others in the same boat?)

It's also possible to be hit by this bias if you're not thinking of it while shopping. Last year, I was invited over to watch the Super Bowl at a friend's, and they were also celebrating his niece's birthday. Of course, I brought a gift -- a Cookie Monster plushie. Unfortunately for me, someone else brought a teddy bear that was obviously much larger and higher quality! Oops.

The moral, I suppose, is that if you're going to get a cheaper gift, shoot for something that's very different than what other people are likely to buy.

This advice on Christmas gifts will only work if you leave the price tag on, or if your recipient is sophisticated enough to recognize, say, that a particular scarf is worth $45. I once opened a package that I received in a gift-swap game that contained a (to my eyes, rather ordinary) Christmas ornament. My face must not have shown the proper appreciation, as my wife then whispered to me that this was a very expensive ornament. Evidently the givers had instinctively followed the "expensive junk" philosophy but the effect was nearly lost on unsophisticated me.

Thanks for this over the holidays. (You asked for feedback from practical applications).

It helped me come to the realization on why some stores can get away with put horribly, stupidly expensive chocolates on display right at the counter top: not only do they want you to buy it (duh), but it also lets your recipients know that you bought them a $5.99 bar of chocolate that would otherwise be indistinguishable from the larger $1.49 chocolate bars at the grocery store (assuming that your recipients have shopped at the same stores as you and are aware of how "nice" the gift is).

As a result we bought several overpriced chocolate bars to show how generous we were.

Another good item which I bought for someone for his birthday (unconciously following the above advice) was a $15 version of the fifteen puzzle. Compare vs. an $18 paperback book I was considering for that gift.

Now I'm wrestling with the inverse problem. I find myself wanting an Asus Eee PC, and justifying it to my wife because of how cheap it is - $399. Which is the same price as the PS3, which I don't even bring up because of how expensive it is - $399.

I find myself doing this, and even consciously recognizing it often doesn't change my actions. For example, if a half-rack of BBQ ribs costs $12.99 and a full rack costs $18.99, I'll 'upgrade' to the full rack since it seems like a waste to pay so much for a half rack. But if the only option was a full rack for $18.99, I'd order something else because that's too expensive.

PS: If you actually use this trick, I want to know what you bought.

When my boss's son was born, I gave him an expensive stuffed animal hand-made from recycled material. I didn't deliberately use the trick -- when I was making the purchase, I remembered that I had read something about gifts to buy to appear generous on OB, but I couldn't remember the details. I took the price off the tag, but if my boss or his wife thought to Google the artisan, they would be able to see roughly how much I payed.

"Which is more memorable, a $25 shirt or a $25 candle?" I asked my younger brother and he said the shirt.

Also the 'theory' will only work if that person knows the worth(cost) of the item Or I guess you could leave the tags on.

I buy $50 melons all the time. In fact I have a few in my drawer at work, more at home.

My melons are non-perishable though. They come in various varieties, lush.com, sabonnyc.com, mariebelle.com, ect. If the melon skin is not aesthetic pleasing it is replaced with something from papyrusonline.com

I'm collecting quotes to help me remember all the things that I should be remembering in order to overcome bias, and I'm wondering if someone has one for the sub-sequence on the Affect Heuristic.

and your goal is to display your friendship, rather than to actually help the recipient

I don't think that appearing to have spent a lot is the best way to achieve that, even if you manipulate what amount of money they think of as a lot. You'd better give some imaginative present that suits the recipient's tastes well. (Making something yourself rather than buying it is even better.)

PS: If you actually use this trick, I want to know what you bought.

I have a sister who is very sensitive to her financial situation and will refuse to accept most gifts I've offered. She allowed that I might bring a salad to her recent birthday party - so I brought one of the cheaper ones from Edible Arrangements. She loved it, and I was able to spend about my price range on a gift for her.

Gosh, it's amazing the biases we have when the data is non-evaluatable, and then even when we can compare, we still have a bias towards an overflowing but smaller can, and an under filled but bigger can. The funny thing is I realize I've thought this way, too, until I read this just now. I shall not make the mistake again!

I'm just a regular guy who stumbled on LessWrong some time ago, and it has helped me see a lot that I was missing in this world and, yes, to change my mind. Much of this stuff is hard to grasp for a man with limited math skills, but I think I may have an innate grasp of heuristics in some cases. At any rate, I have long made it a practice to budget an amount for a particular gift, and then seek out the smallest, most precious object that that amount will buy, rather than the biggest and most bountiful. (Except for children under 7 or so years of age--for them a big box trumps a small box no matter what's inside.) And I am not fooled by marketing tricks as often as my peers seem to be. Thank you all (commenters too!) for this great body of information. I intend to read every word in the whole wiki.

High-end brand neck tie or a scarf would be a classic example of this. You can also exploit the scarcity bias in this context. Find an antique item (e.g. something costs less than 50$ necktie) and tell that it's very rare and you spent some time to find it. In addition, they can never guess the price, it's an antique it can be hundreds of dollars who knows?

Are the gambling guys actually suggested that they will play several times? Because I, seeing both things side by side, still prefer 29/36 over 7/36 by the easy reasoning "better win $2 then nothing", and, if I'm only playing once, I claim it *is* a good strategy (otherwise you could play a lottery suggesting to win a billion with chances of 1 to million instead of working on a one-time job for $500 guaranteed - again, I claim it is salient to choose the job).

The "two ice cream cups from Hsee (1988)" image is broken -- I think it was hosted on old-LW and has now gone away. So I found the paper and uploaded a new copy of the image to imgur. Here it is.

This seems related to scope insensitivity. In talking about 200,000 dead birds, 200,000 has low evaluability. Same with having a 1/X chance of dying in a car crash.

It's also worth to note that while the recipient of a 1000$ watch will probably mention it in their will, the recipient of a 1000$ car will mention you in not-so-kind words whenever it breaks down. The same with the expensive scarf and coat: the scarf is likely warm, soft, stylish and durable, since it is an expensive one, while the coat is likely the opposite, thereby representing a far lower value than its price would suggest.

Of course, the number of entries in a dictionary is more important than whether it has a torn cover, at least if you ever plan on using it for anything.

If you plan on using it to decorate your shelf, the cover is essential.