In the previous post I laid out the circumstances of our little experiment at the annual street sale.
Here's what happened:
Some of the early arrivals, who are usually dedicated bargain hunters, suggested very low prices were appropriate for everything.
For example, the woman who cleaned out a dozen full length movie DVDs told me a fair price for them was 50 cents each. After asking me several times if I had purchased them at a flea market (No, I bought them all new, I assured her), and if they were good quality (Yes, I bought them all new, like I said.) She also told me she didn't want me to think she was cheap.
As the day wore on, one pattern became clear. Most people had no idea what to do, and kept wanting us to name a value. Some people were so flummoxed that they left rather than guess.
Some people, mainly those of greater means, by the look of things, wanted to donate MORE because it was a good cause. These folks were also worried about whether they were contributing enough. Typically they gave us $5 for a book. They were also concerned about appearances and social judgments, and did not want to "be cheap" or "ungenerous." One lady actually contributed a book she had just finished reading, as well as paying $5 for a book. She told us she was doing a charity run the next day for the same hospital. Our actual neighbors also fell into this category -- these are people we know and would be seeing later that day at a social event.
What does it all mean
First, let's look at the absence of a price.
Determining value is not as easy as we think it is. Plus, for many people, they would be buying something they probably don't buy very often, such as hardcover fiction books, for example. Price is one of the things we use to JUDGE value, especially relative value. In the absence of a price, it's hard to form a benchmark. One price in isolation creates the same problem. However, if you have a couple of priced items, you can start making comparisons.This kind of comparison, in fact, is usually how pricing research is done.
Left to our own devices, we are not good at setting values on many things -- real estate and used cars are both good examples. Most people overprice these items unless working with a professional.
Why did some people want to pay more?
The second thing that interested me was the very wide divergence of "fair price" in the situation set up. I think a concept called social capital was mediating the event. Social capital is about the norms and exchanges that govern social relationships rather than commercial exchanges. And we had set this up as a social exchange (not keeping the money, not setting prices). Except for many people, they did not see us as part of their network, and were kind of uncomfortable with something that was NOT a commercial exchange.
For people actually in our social network (neighbors), or connected somehow (like the lady doing the charity run for the same hospital) the exchange was about something else altogether. Recipocity is one of the notions that comes into play. For these people, our yard sale had turned into a charity fundraiser, and they were more concerned about making a reciprocal exchange that honored social norms than getting a good deal.
If you are a behavioral scientist, you would set up a whole bunch of experiments like this and actually measure what makes a difference. For example, did our sign saying "Thank you" affect the average amount of money in the jar? What about the sign saying "Thank you for your generosity?"
One person accused us of trying to put a "guilt trip" on her. For her, we were violating the social norms of a yard sale, where there might be haggling, but you have an asking price.
I can tell you one thing with certainty: the guy that got the arm chair for $10 got a heckuva deal, no matter how skeptical his wife looked when she came by.