We will talk in another one of these videos about decoy effects, and how these can help drive your customers to the options that you want them to pick. Today I want to talk about a special type of decoy called the less is more fallacy. This was first discovered by a Christopher Hsee, a Professor at the University of Chicago Business School (though despite this, he didn’t seem to have much of a knack for branding, since he called it the far less snappy “less is better” effect).
Suppose that you’re shopping for coffee mugs on eBay. One seller is offer a box of twenty mugs, though three have nasty chips and two are missing. The rest are pristine. Another seller is offering, for the same price (its Buy It Now) a box of twelve intact pristine mugs. Which seller do you buy from? Notice that, in effect, the first seller is offering 15 mugs for the same price that the second seller is offering 12 mugs. You’d be crazy not to buy from the first seller (unless you’re so lazy that putting the five broken mugs in the recycle bin a really a big issue for you). But people don’t. In general, they’d rather get the 12 pristine mugs than – for the same price – the 15 pristine mugs plus a few broken ones. For the same price. In fact, many people will even pay MORE to get fewer mugs. That’s the less is more fallacy.
Why does it happen? When we’re figuring out whether or not something is good value, we tend to take an average of all the items in the set, even when this doesn’t make much sense. Here’s another example of this. Alexander Chernev – just down the road from Hsee – at Northwestern University in Chicago did a version he called the dieter’s paradox. He asked participants to guess how many calories were in a burger, or a burger plus three sticks of celery. The results were that adding the celery sticks made people think there were 100 LESS calories. Less is More and More is less. People somehow think that more food mean less calories.
How does this work for your website? You might think that, if you’re trying to distinguish yourself from a competitor who’s offering something identical for the same price, that you can get the edge by adding a couple of low value freebies. But in fact, the less is more effect means that by adding these low-value items, you risk making your package as a whole look worse values. So, think carefully when designing your website. Sometimes the way to get more, is to offer less