Zero is another price and we tend to over value it. Even when relative value remains constant, the absolute change from 1→0 holds more salience than the same relative change of n→/n-1/
- This over-valuation of free becomes a real problem when valuing a free item against another item
- Most transactions have an upside and downside, but with free we forget
the downside. We perceive free as no visible loss (we aren’t directly
paying for it)
- However, as shown, we can miss-value a free item or we can incur unseen costs such as opportunity or time costs
1
1. Ariely, D. D. Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions. (Harper Perennial, New York, NY, 2010).