Behavioral Science For Brands: Leveraging behavioral science in brand marketing. How Uber creates psychological distance to make prices feel smaller
May 2, 2023
Discussion of Uber’s testing lab and large-scale field experiments on pricing and behavior. Exploration of the pain of payment and how contactless methods, chips, and subscriptions reduce it. Examination of precision pricing, charm pricing, and left-digit bias to make prices feel smaller. Examples include surge pricing perception and defaults that boost retention.
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Celtics Ticket Study: Card vs Cash
- Prelec and Loewenstein auctioned Boston Celtics tickets and compared cash vs. credit card bidders.
- Credit card bidders bid about twice as much as cash payers, showing payment method affects willingness to pay.
Contactless Payments Reduce Price Sensitivity
- Newer payment technologies (contactless, in-app) reduce pain of payment even more than cards.
- Any tech that increases distance from cash lowers price sensitivity.
Chips Change How Money Feels
- Casinos convert cash into chips to make money feel like 'monopoly money' and hide pain of payment.
- Visible wins and hidden losses amplify perceived success and encourage betting.
