People pay more when things are offered cheap

When given the choice of getting something quite cheaply or for nothing, you may end up paying more than its real price, a behavioural study has found.

And this behaviour stems from people’s effort to keep a good image of themselves, according to the researchers who tested how people responded to “pay what you want” scenarios.

The researchers from the Rady School of Management at University of California, San Diego, found consumers feel bad when they pay less than the appropriate price, causing them to pass on the opportunity to purchase the product altogether.

If a person doesn’t want to pay the “appropriate” price, then he may not buy at all, they said. They also found that when eating at a “pay what you want” restaurant, people tended to spend more when paying anonymously than when others could see what they were paying.

That’s because, they speculated, the psychological effect of being monitored may crowd out the self-image boost, because the person believes he or she “had to” pay the fair price.