Zero is another price and we tend to over value it. Even when relative value remains constant, the absolute change from 1â0 holds more salience than the same relative change of nâ/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 arenât 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).