Latest / Behavioral Economics with Fexingo: Decision Making, Bias, and How People Really Spend
Why Your Brain Treats Free Shipping as a Reward
Episode 55 of Behavioral Economics with Fexingo explores the zero-price effect — why 'free' feels disproportionately valuable compared to a tiny cost. Lucas and Luna unpack a 2007 study by Kristina Shampanier and Dan Ariely that found people overwhelmingly prefer a free $10 Amazon gift card over a $7 gift card that costs $1, even though the latter is mathematically superior. They also discuss how retailers like Amazon use free shipping thresholds to trigger this bias, and why the word 'free' activates the brain's reward system differently than a discount. Practical…
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