Are your buying decisions rational?




How much of your buying decisions are Rational?

I believed and convinced myself -up until yesterday- that I would never get annoyed by any Spotify’s ads, simply because the app’s benefits would outweigh any ‘annoyance’ and that I would never let the ads influence my decisions. And indeed, they haven’t. However, after being bombarded with personalised audio ads all day yesterday, Dan Ariely’s argument (see Are we in control of our own decisions?) that “we have an illusion in making decision rather than an actual decision” struck me hard and forced me to think of in which contexts my decisions have been irrational. Given the fact that I am a purist and like to think that I am in control of my decisions, the discovery was bitter and hard to swallow.

The first context that came to my mind was grocery shopping. In numerous occasions I left home with a list of groceries including brand and even quantities needed. However, I hardly remember a time that I went to the supermarket and actually bought only what I had in the list or in my mind. This is mainly because supermarkets or brands cleverly design promotions exploring the concept of framing effect (a form of cognitive bias) that have a strong ability to influence our decisions. Since most of us are risk averse and this is widely agreed amongst psychologists and economists, businesses including supermarkets frame and present their products/services in designs that force our decisions to be inclined towards risk avoidance. For example, I have lost count of how many times I bought items (not included in my grocery list) such as Gillette razors, Persil laundry products, Colgate toothpaste, Ferrero Rocher, etc. simply because they were presented in a reasonable way. The explanation for my rationale is simple, ‘better buy it now ‘cos it might be full price when I need it’.  This rationale is purely driven by risk aversion. One may argue that this kind of buying influence is beneficial, and I strongly agree. Moreover, these are non-perishable goods. However, what about perishable and unnecessary goods? Is it fair or dare I say moral for supermarkets to influence our decisions on something that will probably end up in the bin? Whose money is being wasted? Not to mention the probable waste of scarce resource.

The second context that I remembered was the Amazon ‘Frequently Bought Together’ and ‘Customers Who Bought This Item Also Bought’.  Have I fallen for these marketing traps before? Have ever I bought anything that I didn’t need and regretted afterwards? And even worse, have I ever kept a regretted purchase just because I couldn’t afford the returning hassle? Yes, to all questions. Have you not? It appears that Amazon uses some sort of sophisticated framing effect to tap on customers’ rationality and somehow persuade them to consume more than rationalised. Another thing that amazes me on Amazon is how the company often displays the RRP crossed followed by the ‘actual’ price and resumed with savings summary. Why does Amazon do it? Do customers really need to know the RRP? Is the savings summary really necessary? I certainly never asked myself these questions before. As a matter of fact, I even ‘consciously’ used RRP many times before to ‘help’ me make purchasing decisions. What I didn’t know is that all this long I have been a victim of anchoring (another form of cognitive bias) by heavily relying on the first piece of information displayed (RRP – the “anchor”) when making my decisions. After this bitter discovery, I will probably be more rational when faced with RRP displays.

Third context, online shopping: an extension of the previous paragraph. I have also lost count of how many times I have become a victim of websites’ cookies. My experience is straightforward and probably similar to many online shoppers. For example, I used to browse websites such as Uniqlo and Hollister to check out their new products. However, as soon as I left their website I would be exposed to ads from their products all over other websites. And eventually, guess what? Yeah. I would buy something. Were my decisions rational? I don’t think so. By being constantly exposed to these ads, my mind was constantly reminded of and slowly nurtured a compulsive desire that eventually forced me to make the decision to go on these websites and purchase something. My decisions might not have been any different, though they would at least have had a chance of being rational had I not been constantly exposed to these ads.

The number of contexts to which our decisions are being influenced are hard to pin down. From the online worlds of Facebook ads to the offline worlds of sexy waitresses’ suggestions, our decisions are on a regular basis prone to becoming victims of cleverly designed businesses’ strategies. Spotify’s ability to target me with personalised audio ads is a proof of the latter. What’s more, the IoT is boundary-less in a sense that our own information (e.g. browsing history and mobile usage) can be used against us as a tool to induce irrational decision-making. Practical people may think that all these mechanisms functioning as an optimiser for decision-making is a good thing. However, for purist like me, the idea that my decisions are influenced and possibly ‘controlled’ by businesses applied behavioural psychology is intolerable. Designed external forces have the power to make us live in an illusionary world in which we end up believing our decisions are rational. But (I know, there is always a but) we can change it. Being aware of our decision-making vulnerability is a great leap towards regaining rational decision-making freedom.

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