Why can’t we resist Black Friday? A behavioral economist explains.

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Imagine you put on an old coat that you haven’t worn in a long time, and to your surprise, you find a crumpled $20 bill in your pocket. How well does she feel? Are you going up a half step on a mood scale of one to 10, or maybe a full step?

Let’s imagine a different scenario. She is doing the laundry, pulls out a freshly washed pair of pants, and discovers that she forgot a $20 bill in her pocket, which is completely ruined. What does that do to your mood on a scale of one to ten?

If you’re like most people, you feel a lot worse about losing $20 than winning $20. That tendency is called loss aversion, one of many dangerous errors in judgment that behavioral scientists call cognitive biases. The mental blind spot called loss aversion is one of the most fundamental ideas in a field of behavioral science called perspective theory in recent decades.

Loss aversion is one of the three key reasons why our minds are sucked in and fooled by Black Friday and Cyber ​​Monday sales. Retailers know that our intuitive reaction is to avoid losses, and research shows that this impulse can be up to twice as powerful as the desire to make a profit. By offering short-term sales, available only on Black Friday or Cyber ​​Monday, they tap into our deep intuition to protect us from missing out on the selling opportunity.

Similarly, loss aversion helps explain why so many marketing techniques involve free trials and returns. Retailers know that once you buy something, you’re loathe to lose it.

In a classic research study illustrating this trend, participants were divided into two groups: one was given a candy bar and the other was given a cup. Then, they were offered the chance to exchange what they had for the other item. Of the students who received the cup first, only 11% chose to trade it for the chocolate bar, and only 10% of the students who received the chocolate first traded it for the cup.

We want everything we have and are reluctant to lose it, like the opportunity to buy something at a lower price for a short period of time during the Black Friday or Cyber ​​Monday sales. In fact, behavioral scientists have a special term for people who value too much and are reluctant to give up what they have: the endowment effect, a specific form of loss aversion.

Let’s imagine a different scenario. It’s Cyber ​​Monday and you decided to check the deals on an e-commerce website. He feels confident that he will only get one or two of the best deals. But once you visit the website, you are hooked. All those offers look great. The discounted prices are too good to pass up. So you end up taking advantage of a bunch of deals and buying a lot more than you intended to in the first place.

Why did that happen? Why couldn’t you control yourself? It is due to a cognitive bias called restriction bias. We substantially overestimate the extent to which we can restrain our impulses. In other words, we have less self-control and weaker willpower than we like to think we do.

Related: Online scams are more sophisticated than ever. Here’s how to shop safely on Black Friday and Cyber ​​Monday, according to a cyber intelligence expert.

That’s why so many people overeat at buffet restaurants. If we had good self-control, buffet restaurants would be great – we could get whatever we want at a cheaper price than ordinary restaurants. The problem, however, is that we overestimate our ability to control our impulsive desire to grab more food, and loss aversion causes us to try to avoid missing out on the wide variety of food available at buffets.

Black Friday and Cyber ​​Monday are the commercial equivalent of buffet restaurants. So many tempting offers, with loss aversion leading us not to want to lose, all resulting in buying much more than we wanted.

The last key psychological reason you get sucked into the Black Friday and Cyber ​​Monday sales explains why you’re reading articles like this. Here’s the thing: the abundance of news, announcements, and social media posts around Black Friday and Cyber ​​Monday makes it seem like everyone is thinking about sales on those days and looking for great deals.

As a consequence, our mind prompts us to jump on the bandwagon of Black Friday and Cyber ​​Monday sales, a trend scientists call the bandwagon effect. When we perceive other people lining up around something, we are predisposed to join them. After all, they wouldn’t be doing it if it wasn’t a good idea, right?

Loss aversion, moderation bias, and the cart effect are mental blind spots that affect decision-making in all areas of life, from the future of work to mental fitness. Fortunately, recent research has shown effective and pragmatic strategies to defeat these dangerous errors in judgment, such as using decision aids to limit our purchasing choices.

A useful Black Friday and Cyber ​​Monday strategy is to decide in advance what purchases you’d like to make if they’re on sale, and buy them online rather than in-store. For example, you might decide to buy a certain laptop if it’s more than 20% off, or a specific big-screen TV if it’s 30% off. Save the website pages for the laptop or TV you want to buy, and then visit them on Black Friday and Cyber ​​Monday to see if they’re on sale. If they aren’t, be disciplined and don’t buy anything else, as you’ll likely be stuck buying a lot more than you wanted, and some deals are too good to be true. Instead, wait for the Christmas sale.

If you’re an entrepreneur selling products, consider whether you can take advantage of loss aversion, moderation bias, and the walk-through effect among your customers, whether it’s Black Friday and Cyber ​​Monday or all year long. Alternatively, consider sharing this article with your employees to help them make smart decisions this holiday shopping season.

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