Tag Archives: Consumers

Excellent choice Sir!

By Erica Zaiser

A recent article in the Guardian highlights how restaurants manipulate consumers into buying their more profitable meals and drinks. In an excerpt from William Poundstone’s book “Priceless: the Myth of Fair Value” the article demonstrates how a restaurant’s menu design can entice us to order a more expensive meal over better bargain food being offered. It is certainly not unexpected that a restaurant would use clever marketing to make more from its customers, but it is interesting how in the course of a nice evening out we somewhat unknowingly receive numerous cues from both the restaurant and the waitstaff to spend just a bit more.

In a recent article in the Journal of Applied Social Psychology, social psychologists Seiter and Weger find that waiters can actually increase the tip they receive from customers by complimenting their meal choice. Although previous research has found that the gender of the server can influence tips received, this study did not find gender to influence the amount. Instead, the researchers found that when a generalize compliment was paid to customers their tips increased roughly 3% versus the no-compliment conditions. However, as the size of the dinner party increased, the effect of the compliment seemed to decrease with large dinner parties showing no change in tipping when given compliments. One interesting thing the authors noted, was that of the waiters and waitresses used, one waitress actually received fewer tips when complimenting. The authors present a few possible reasons why individual differences may influence the effectiveness of compliments and increasing tip size. But, there are probably many reasons why different waiters may have varying levels of success with such a technique. How do you feel when a food server compliments your meal choice? What other subtle techniques could be being used by waiters/waitresses to get their customers to tip more?

Read more: The Effect of Generalized Compliments, Sex of Server, and Size of Dining Party on Tipping Behavior in Restaurants

A Time to Repay

800px-Credit-cards

In tough economic times, financial experts often recommend reducing debt as much as possible. For many people, this debt stems from credit cards. The credit card industry has been scrutinized in recent months due to a number of questionable practices, such as dramatic raises in interest rates and reductions in credit limits with little to no notice. To combat these issues, the U.S. government has passed a bill to better protect consumers from actions that they feel are unfair and burdensome. Many hope that these protective measures will better allow consumers to get out of debt.

However, a recent study in Psychological Science highlights how less overt factors may be at least partly to blame for the credit card debt that plagues many people. Classic work by Tversky and Kahneman (1974) has shown that people tend to anchor to arbitrary numbers when making decisions. Additionally, a recent study shows that anchoring is particularly problematic when it comes to credit card statements. In his work, Neil Stewart (2009) gave participants a mock credit card bill that featured a minimum repayment amount or an identical statement with no such repayment amount. He then asked them to state how much of the credit card balance they would pay off.

Stewart found that people anchored to the minimum repayment amount and stated that they would pay less of the credit card balance when compared to people who were not given a repayment amount. From this work, one might conclude that changes to billing practices, particularly the presentation of billing information, may go a long way in reducing mental biases and help consumers get out of debt.

square-eyeThe Real Problem With Creditholders: The Cardholders

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Stewart, N. (2009). The Cost of Anchoring on Credit-Card Minimum Repayments.