Thursday, 15 May 2008

We're more likely to listen to expensive advice

Whether its political spin doctors or orange-skinned health gurus, there seems no shortage of people seeking to charge others good money for the benefit of their wisdom. Regardless of the quality of this advice, one thing is for sure: The fact that someone has paid for it, means it is more likely to be heeded.

That's according to Francesca Gino at Carnegie Mellon University, whose new study shows that we're more likely to use advice we've paid for than advice that's free, even if there's no difference in quality between the two sources.

Dozens of students were asked questions about American history and received small cash prizes for correct answers. The students were either given the option of receiving advice on the correct answers, or advice was imposed on them. Sometimes this advice was free; other times it was paid for out of the students' winnings. Crucially, the advice always came from the same source - in the form of the answer that a student from a pilot session had given to the same question - so the quality of advice was held constant regardless of whether it was free or paid for.

Throughout the study, the participants took more account of advice they had paid for than advice they were given free, even though it was made clear to them that the advice was of the same quality. A final study showed the students took even more account of advice if it was made more expensive.

Gino said her findings could be explained by a phenomenon in decision-making theory known as the sunk cost fallacy. This is our desire to justify our past investments through our present and future behaviour - it's why that expensive pair of shoes that you never wear is still cluttering up your cupboard. In the case of advice, it seems we feel compelled to use guidance we've paid for, so as to justify the expense. And perhaps it explains why expensive frauds can sometimes be so influential.

GINO, F. (2008). Do we listen to advice just because we paid for it? The impact of advice cost on its use. Organizational Behavior and Human Decision Processes DOI: 10.1016/j.obhdp.2008.03.001

Post written by Christian Jarrett (@psych_writer) for the BPS Research Digest.


Anonymous said...

One problem with this study is that in the real world, it is often hard to tell the quality of the sources of the advice, so while I'm sure the sunk cost fallacy plays a apart, I think perceived value would still play a big part.

Anonymous said...

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Anonymous said...

It makes sense to me. When I raised my fees, I actually started getting more business.

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