What does one call this economic/psychological fallacy?

[snarp]

Looking at the bill for the surgery, I found myself thinking, "Well, I guess it's good that I'm over my out-of-pocket limit on my insurance for the year, anyway! I can go to the dermatologist and only have to pay the copay."

See, it would be better never reach my out-of-pocket limit in the first place. Yet my brain sees it as a good thing - because, I guess, I get some kind of serotonin hit when I get an EoB and it says "patient responsibility = $0"? It's only $0 because I already paid $3,000*! It's not a good deal!

I resent this error on the part of my brain's math node. I'm sure there are scams that make use of whatever makes it happen.


* Or, rather, Mom and Dad are paying this bill, which is the big one, so I personally have only paid about $1,000.

Comments

[petronia]

I'm not sure there's a specific name for this in psychology, but it's talked about in standard marketing texts: people will basically go nuts when they see "free" or "zero". XD; If item X is "free", they will queue up to get one - even if it's something they wouldn't normally pay a dime for. They've done trials like - you can either buy an expensive chocolate for $0.50, or a Hershey kiss for 1 cent, and it splits maybe 25/75. But if you say the choice is between buying the expensive chocolate at $0.50 and getting the Hershey kiss for free, suddenly 99.5% go for the kiss.

It's a fallacy that's really basic to human psychology, for some reason; like placing a greater value on something one owns, rather than an equivalent one has yet to acquire. The mug on your desk has greater value to you than the one in the store, even if it's the same mug.

[snarp]

I'm not sure it's the same thing; that one seems to me more like a weird form of the launching-energy vs. cruising-energy problem (I'm using the wrong terms for it), where people find it make the decision to start doing something than to keep it up once the decision's been made.

In example 2, the subject's got a choice between making a transaction - that is, spending the fifty cents - and getting something for it, or doing nothing and getting something for it. Regardless of the negligible financial stakes, the transaction option is "harder" because it requires a commitment on the part of the subject, and so requires more launch energy. Whereas in the other example, making a transaction is the only the option given to the subject, so s/he starts out already launched.