Study shows fairness, obligation, and reciprocity still matter

Nov 27, 2013 12:12 GMT  ·  By
Consumers were more likely to pay extra in Pay-it-forward schemes than when they were asked to set their own price for products they wanter
   Consumers were more likely to pay extra in Pay-it-forward schemes than when they were asked to set their own price for products they wanter

In a new study of consumer behaviors, scientists at the University of California in Berkeley (UCB) looked at how much money people spent in goodwill pyramid chains called “pay-it-forward,” versus when they could name their own prices for various products. Price tags were not used in this study. 

The investigation was prompted by the widely held assumption that consumers will always act selfishly and scan for the best possible deals at all times. This is the exact paradigm under which all major retails operate, and which provides the foundation for their PR and ad campaigns.

The Pay-it-forward scheme was selected due to its very interesting nature, and the fact that it calls on people who were the beneficiaries of good deeds to repay their so-called debts to others, instead of the person who originally did them a favor.

What the team found was that people were willing, consciously or not, to pay more money for the same items within a Pay-it-forward scheme than when they were allowed to name their own price for the exact same products.

This investigation therefore suggests that traits such as fairness, obligation, and reciprocity may also play a role in consumer decisions, alongside the drive to get the best deal that scientists already knew about. UCB experts say that test subjects constantly overestimated predictions of how much money other participants paid for certain items.

“It’s assumed that consumers are selfish and always looking for the best deal, but when we gave people the option to pay for someone else, they always paid more than what they paid for themselves,” explains UCB PhD student and lead study author, Minah Jung.

The expert is based at the Haas School of Business, and is also a Gratitude Dissertation Fellow at the university's Greater Good Science Center. “People don’t want to look cheap. They want to be fair, but they also want to fit in with the social norms,” Jung goes on to say.

The research was conducted both in the tightly controlled confines of UBC labs, and in the real world. Locations where the study was carried out include the Cartoon Art Museum in San Francisco, and the Jack London Square, in Oakland.