Behavioural economics and wine
These ideas had a big impact in the field of behavioural economics, and give an insight into why spending habits are higher with credit cards. Consumers are removed from both the timeframe of the payment – needing to pay it back in future – and there is a weaker coupling: it feels as though real money is not being spent when placing a card into a machine. There are more subtle ways that restaurants can implement these ideas, however. For example, offering a loyalty plan that allows customers to delay purchase. Ecommerce merchant Elizabeth Hollingsworth recommends offering vouchers with no expiry date (Hollingsworth, 2014).
Other methods exist to make the price that a consumer pays seem smaller. The Perfect Meal (Spence & Piqueras-Fiszman, 2014) describes a method many wine lists use, called anchoring. This comes from the work of Tversky and Kahneman (1974), who demonstrated that people view price relative to other prices. So, if they are shown one very expensive wine, then one quite expensive wine, they will view the latter as cheaper than it would have seemed if it was presented by itself because their price views have been skewed by the first wine. This is why it is common to see wine menus at restaurants and bars place their more expensive wines at the top of the list. This sets the bar high for price, and everything else seems more reasonably priced afterwards. A similar approach is used in some supermarket shelves: see left for a wine shelf in Tesco. Some of the
more expensive wines have been placed at eye level. This draws more attention to these wines, and makes them more accessible, while cheaper products have been placed lower down in more inconvenient positions. This could be referred to as adding intentional ‘ sludge ’ to an interaction by forcing someone to kneel down. ‘ Sludge ’ is the reverse of the idea of a ‘ nudge ’ , a concept developed by economist Richard Thaler in 2008 which is about gently pushing consumers into favourable decisions by making the less preferred options require slightly more effort, such as donating organs becoming an opt out scheme rather than an opt in scheme in the UK (Thaler & Sunstein, 2008).
The language of wine selling
Choosing words In 1974, psychologists Elizabeth Loftus and John Palmer set out to study the effects of leading language on eye- witness testimony (McLeod, 2014). They sourced a group of 45 American students and played each of them a video of two cars in a crash. They then asked questions to the participants, such as ‘ About how fast were the cars going when they (smashed/collided/bumped/hit/contacted) each other? ’ . The researchers used different verbs for different participants. They found that the more violent the verb they used was, the greater speed participants estimated. The results are shown right.
Image from simplypsychology.org/loftus-palmer
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