Thanks for your participation. There were 265 responses with everyone answering every question. That’s helpful. Below are the results from yesterday’s entry followed by discussion.
1. Whether one would try another purchase with quarters:
2. Whether one would try another purchase with a dollar bill:
3. Business profile
Business owners: 34%
Planning to be one: 17%
Former business owner: 6%
Off the bat, I was very surprised that the difference of a dollar bill increased the yes responses (#2). I’m not sure what that means but I welcome your ideas. He who shall not be named said people have a different relationship with dollar bills, that the relative value is perceived to be less than coinage. He predicted this result before the responses started coming in. He’s so smart, I’m glad I married him.
Comments were great, you always make me smile and lighten my day. Jay: I’d look good in a goatee and white suit but not wild on taking up chicken eating. Natasha: I want to sell you whatever it is you want. Always. Nikki: You’re on target, what I was looking to measure (however imperfectly); Alison implied the same. Jennifer: percussive maintenance was priceless. Ditto for Penelope’s brick suggestion. Alessandra: Cálmate, vending machines are deadlier than sharks. Sandra/Liz: I have no idea what they cost. I’m hopelessly addicted to club soda and buy it in 5-10 case lots; they don’t sell it in machines. If they did, my response would have remained no and no to 1 & 2 -ditto what Barb said. Tricia/Oriole: crap shoot duly noted, uncertainty and intermittent reinforcement is an interesting twist. Mary sets a limit on sunk costs; another interesting strategy. Lisa: the Japanese really will sell anything in a vending machine. And Stuart ties it all up neatly. In fact, I’d rather he write this entry.
The purpose of the imperfect survey was to get a sense of how willing people are to throw good money after bad. The real life scenario I had in mind was working with a contractor or related party. How do you know when to stop throwing money at the problem? What is your loss tolerance? What is your risk aversion? It matters when considering financing.
The relative low cost shouldn’t have been a factor. Or rather, I didn’t want it to be a factor because it loused up my results. Buying a second soda with a dollar represented an escalation of costs, specifically 33% higher than the original “quote”. That’s a lot. And a lot of people do that everyday with contractors. The issue is, you’re not likely to get the value of the sunk costs ($1.75) when the job value was originally 75 cents. The former figure amounts to 133% over estimate for which you get zip.
Stuart said there’s a cost associated with not solving the problem -and don’t we know it. This is why I liked Mary and Stuart’s idea of capping their losses before moving on. Setting a limit means you’re willing to take risks which you must do in business (you can’t be too risk averse) but also being able to walk away to look for another solution. The sad thing I see all too often is people sinking 200%, 300% or even 400% more into a relationship that isn’t going to pan out. I really think this is due to Tricia/Oriole’s mention of the affect of uncertainty and intermittent reinforcement. There is no more effective kind.
Your further comments are appreciated.