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Shopper happy to shun ultimatum offers

Geoff Riley

7th April 2017

Bad news for pushy sales people: putting pressure on us to buy now or miss out doesn’t necessarily make us go for limited-time offers. That’s the result of experimental research by Robert Sugden, Mengjie Wang and Daniel Zizzo, presented at the Royal Economic Society's annual conference at the University of Bristol in April 2017. In fact, a super-short ultimatum makes it less likely we’ll bite.

The researchers gave participants in their experiment a series of time-limited offers to discover their motivations for accepting or rejecting the opportunity. Time-limited offers were actually less likely to be chosen when time pressure was high than when it was low: increasing the period during which a time-limited offer was available from 4 to 12 seconds increased the probability that the time-limited offer was chosen by 13%.

But if more buyers aren’t hustled into a snap decision by fear of missing out, why do we go for time-limited offers at all? 

The researchers conclude that risk aversion is the dominant driver of purchases, provided the time pressure isn’t too extreme: ‘Accepting a time-limited offer is less risky than continuing to search for a better price, and it is known that most people prefer to avoid risk even in decisions that involve very small stakes.’

Familiar examples of time-limited offers include the doorstep seller who claims that he is currently ‘in the area’ but will not be returning; the telephone seller who makes a ‘special offer’ that can be accepted only during that phone call; the internet site that offers a buy-now discount; and the seller of a used car who claims that another buyer has shown great interest in it and will be returning shortly.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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