Imagine this:
You bought $80 shoes/sandals for wedding of a very special friend of yours...on the day of wedding you realize that you lost the shoes...Shoe-shop is right around the corner. Would you slash out another $80 and get new pair? Likely NOT.
Now consider this...
For the same wedding you are in store to buy shoes for yourself and at counter you just realized that you lost the $100/- bill that you were planning to use it on this purchase. Luckily, you were having several credit cards in your wallet. Would you yank out one and go ahead with the purchase? Most likely YES.
Researchers ( ya ppl have time to pull up situations likes this and analyze it ) say that the reason you are more likely to yank out credit card is cuz you've not yet associated loss of $100 with the $80 that you are about to spend on shoes while in the former situation mentally you'd think that you'd be $160 out of pocket for a pair of shoes. ( ya he is a good friend, but u r probably not ready to slash out $160 for the shoes in his/her wedding)
I thought this was interesting theory, so I tried to put it in my own words the way it made sense to me.
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Now another theory...
You went out to buy house. You liked it, sat down to do some price negotiation with r.estate agent. House was listed for $155K, then estate agents tells you that there is $3K lot premium going on, but on a special deal they are ready to knock of $1.5K.
Mentally we are wired to do like comparision. In above situation, back in mind we get two ooh-aah's
1. Oooh I'm getting 50% discount on lot premium
2. Aah, I'm about to buy $155K house 1.5 k is just 1%, fine let them throw in....
Would you have threw $1500 at the gas station if one is selling for $1.5/gall while other is selling it for $150/gal. In virtually all situation NO.
And yes, researchers do get paid for this....but I don't. I just feel good writing this, cuz at least I'm feeling I'm doing something than watching screen for 4 hrs for 5.6 million lines of code to compile.
So try to see money as money. Meaning $1 as $1. $3000 as $3000.
$1500 discount on a car is same as $1500 discount on a dining table. (Ohhhhhhhh this sentence would raise some battle! Bring it on pps. This ain't my theories, but sure makes sense)
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