Restaurants are fooling you into spending more money
Behavioural economics is a relatively new field in business, though as consumer tastes become more refined, and bargain hunting becomes more en vogue, it’s never been as prevalent.
The example I always offer when discussing behavioural economics is a good one I’d heard about airlines. Let’s say Airline X wants to attract more travellers by offering a sale, providing 25 per cent off all airfare for a limited time.
According to the principles of behavioural economics, Airline X would be better suited to advertise a contest where one in four tickets would be free. Instead of 25 per cent of all tickets – the same bottom line for the airline as one in four tickets being 100 per cent off – customers would be much more likely to jump at the chance of randomly winning entirely free airfare, thus boosting sales for Airline X through the form of a contest.
Anyhow, these aren’t just principles because they’re heavily studied ideals, but still, that’s behavioural economics in a nutshell: finding ways businesses can better target customers by capitalizing on the way they think, consciously or subconsciously.
In practice, many industries use behavioural economics today, perhaps none more so than restaurants.
Think restaurants don’t trick you, so to speak, to spend more? Here are a few examples of how they do, courtesy Bankrate.com:
1) No dollar signs: Ever notice how fancy restaurants just put numbers next to their dishes, not numbers with dollar signs? “Dollar signs remind people of money,” one restaurant source tells Bankrate. “If you take (the dollar signs) off, it softens the pricing.”
2) Elaborate dish descriptions: Restaurants like to get long-winded when describing their meals, though this isn’t just to blow smoke their own way. By exhaustively cataloguing all the fresh ingredients in a dish, restaurants are subtly convincing you that, hey, maybe with all that I should be paying $16 for a salad.
3) Anchoring: Anchoring is where restaurants offer up one absurd price so as to prepare you to pay a not-as-absurd, lesser-of-two-evils price. So, maybe you’re not spending $75 on a filet mignon, but after seeing that, all of a sudden the $49.99 sirloin starts to sound like a deal.
By Jason Buckland, MSN Money