Zero as a Special Price: The True Value of Free Products
Kristina Shampanier, Nina Mazar and Dan Ariely proposed that decisions about free products differ from other decisions, in that people do not simply subtract costs from benefits but perceive the benefits of a free product as higher. They held the price gap between two goods constant and varied whether the cheaper good was priced low or at zero, and found that in the zero condition dramatically more people chose the cheaper good and dramatically fewer chose the dearer one. They then tested social norms, mapping difficulty and affect as explanations, and report that affect emerges as the most likely account.
Kristina Shampanier, Nina Mazar and Dan Ariely proposed that decisions about free products differ from other decisions, in that people do not simply subtract costs from benefits but perceive the benefits of a free product as higher. They held the price gap between two goods constant and varied whether the cheaper good was priced low or at zero, and found that in the zero condition dramatically more people chose the cheaper good and dramatically fewer chose the dearer one. They then tested social norms, mapping difficulty and affect as explanations, and report that affect emerges as the most likely account.
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Shampanier, K., Mazar, N., & Ariely, D. (2007). Zero as a Special Price: The True Value of Free Products. Marketing Science, 26(6), 742-757. doi:10.1287/mksc.1060.0254