Behavioral economics is a new science that sheds light on some of our most important decisions. It is
study of how and why people make money-related choices. Here are some of
things
studies have shown thus far: Decision Paralysis
One study showed that customers spent more when given four samples of jam to taste than when they had twenty to choose from. Too many choices seemed to lead to an inability to decide. Limiting options may be a useful sales technique, according to this research finding.
Sunk-Cost Fallacy
People are more likely to attend an event if they paid for
ticket than if they got it free, even with
same information and interest. The money is spent, and logically has no relevance to
decision, but this phenomena of behavioral economics persists even when this is pointed out. Aren't most of us going to feel worse throwing away a ticket we paid for?
The applications are obvious, if you look. Perhaps, for example, rather than giving away tickets to "get rich" seminars,
organisers would get better attendance by selling their "$100" tickets for $3. Just having paid something makes people more likely to attend.