Savers - just can't understand some decisions

[biophase]

Just wanted to relay this story.

I have a friend who is coming to Arizona with his family of 5. I will not be in town to pick them up, so they asked me to check on renting a mini-van for them.

So I find a mini-van that is $1250 located at the airport.

For those that don't know, renting a car at the airport costs more than renting a car from another location just due to airport taxes and fees.

I also find a mini-van that is close to my house and costs $900.

Lastly, I find a SUV that is $1100 also located at the airport.

So here goes the discussion...

HIM "$1250 for a mini-van! that's too much, let's do the SUV."

ME "But a minivan has more room and the 5th person isn't crowded in the middle. And carries more luggage" (Keep in mind they are going to drive to the Grand Canyon and Vegas, etc...)

ME "How about you pick up the minivan from an off-airport location. It's only $900."

HIM "But we have so much luggage and there is 5 people. How do we get from the airport to the rental car location"

ME "Uber will cost you $40"

HIM "Uber can fit 5 people and luggage?"

ME "You can get 2 Ubers for 40 or an XL Uber. Either way you pay $40"

HIM "How about when we return the car"

ME "You return it and UBER to the airport for another $40"

HIM "That's too complicated. We will get the SUV for $1100"

So basically, he chose to save $150 because $1250 was too expensive for a mini-van. So they will ride around for 3 weeks in a SUV that is too small for them.

But when given the chance to save another $200 and get the minivan, getting 2 Ubers was too inconvenient and not worth the $200 and extra space. So they sacrifice being inconvenienced for 1-2 hours in an Uber, for being uncomfortable for 3 weeks in an SUV.

Granted, this person has never used Uber so I can understand some apprehension.

It just shows how the brain sometimes can't or won't adapt to something new. Downloading an app and making an account was apparently not worth the hassle. But saving money by settling seem to be ok.

 

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[Digamma]

New things, things we don't feel like we can control, are perceived as risks.

Human beings are risk averse. What does this really mean, beyond the intuitive meaning?

The more risks in a row, the more risk is perceived, even if the total risk is the same.

This means that people will more readily wager $20 than wager $10 and $10 separately.

Your friend perceives a sequence of actions as very risky, because more things can go wrong.
Getting the SUV is just as risky as getting the minivan, but cheaper.

It's worth keeping in mind when crafting offers. If you don't take care of perceived risk, people won't buy.

 

[Nicoknowsbest]

It's similar to people driving 20 miles to save $ 0.05 on a can of beer.

New things, things we don't feel like we can control, are perceived as risks.

Human beings are risk averse. What does this really mean, beyond the intuitive meaning?

The more risks in a row, the more risk is perceived, even if the total risk is the same.

This means that people will more readily wager $20 than wager $10 and $10 separately.

Your friend perceives a sequence of actions as very risky, because more things can go wrong.
Getting the SUV is just as risky as getting the minivan, but cheaper.

It's worth keeping in mind when crafting offers. If you don't take care of perceived risk, people won't buy.

Very interesting.

Haven't thought of it like this.

I also see a lot of people cheating themselves without realizing.

They might be thinking they are getting the cheapest option, but once they run the numbers, they see they trick themselves into buying decisions.

In my friends circle, I connect a lot of it back to emotional behaviors rather than misinformed choices.

Would be interesting to investigate this a bit more.