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December 9, 2007

Stupid Human Tricks Part II

My recent $5 experiment revealed a most irrational consumer behavior. Someone, in the last 20 seconds of the auction, sniped - raising the price from $4.99 to $5.24 to pay for a five dollar bill.

Immediately, I began dredging Ebay manually (someday I'll learn Python) to observe similar phenomena. Saturday, I mentioned these ridiculous observations to a friend and exaggerated a bit. I searched "gift card" and found many selling for greater than face value! The exaggeration I mentioned was "all of them sold greater than face value." Not true. Here's a bunch of real examples I tabulated in order of increasing value of the card.

While they don't ALL sell higher than face value, it's fascinating that ANY do.

Other noteworthy observations:
• Cheaper cards tended to sell for the greatest profit. PROFIT! Even frigging McDonalds!!

• The more expensive gift cards (>$100) seemed to sell consistently at a discount. I am astounded at the existence of a $500 dollar gift card. Purchasing a commitment to spend $500 in Wal-Mart for a steal of $475 isn't a bargain, it's a sentence in hell.

• The Sharper Image was an anomaly selling at a significant discount, but, has anyone ever bought their useless shit? I thought Sharper Image was just a place to stop in and play with their overpriced toys and sit in one of those massage chairs to take a load off during shopping.

• "The WalMart Effect" (you heard it here folks): If you conduct an Ebay search for Walmart, then refine the search from the sidebar by "Gift Certificate", you'll see some 60 something auctions at any one time for Walmart gift cards. For gift cards of less than approx. $150, the final bid is almost always greater than the face value of the card. It seems to happen more for Walmart than any other peddler of crap. Try it. It's amazing. (NOTE: you must mark the items "Watch this Item" so you can see the post auction final price or the item disappears, seems Ebay protects their post bid auctions quite carefully)

Gift CardCard Value, $BidsFinal Price,** $Change, %

$5 bill585.244.80

Outback10810.000.00

Bath Body101310.525.20

Sharper Image1075.79(42.10)

Bath Body 25625.010.04

Bed Bath..25826.004.00

BestBuy251224.99(0.04)

Itunes251023.00(8.00)

McDonalds251525.220.88

Olive Garden251423.00(8.00)

Amazon30930.010.03

WalMart402845.0012.50

Macy's501246.00(8.00)

Target502050.030.06

Red Lobster502150.551.10

CrateBarrel501044.50(11.00)

Starbucks951777.00(18.95)

Exxon Gas100999.44(0.56)

Home Depot1001091.05(8.95)

Home Depot100891.03(8.97)

Home Depot100591.50(8.50)

Macy's100387.88(12.12)

Olive Garden1002595.89(4.11)

Home Depot15013142.00(5.33)

Toys R Us20019173.00(13.50)

Lowes22615202.52(10.39)

Home Depot50022460.00(8.00)

WalMart50028475.00(5.00)

WalMart50025476.00(4.80)

**Final Price includes shipping but seller still pays ca. 3% fee.

7 comments:

Big Momma said...

People are more stupid than I though....

Dave said...

Especially the Sharper Image customer. I mean Sharper Image? C'mon.

karl said...

Dave said: "Purchasing a commitment to spend $500 in Wal-Mart for a steal of $475 isn't a bargain, it's a sentence in hell."

this bit of humorous "prose" is f---ing hilarious.

(it's funny because it's true...)

Anonymous said...

paying $5.24 for a $5 bill isn't irrational if you place a value of $.24 (or less) on the thrill of winning the auction.

irrationality is in the eye of the beholder. check out maurice allais.

Anonymous said...

whoops - comment above should read "(or more)". :)

Dave said...

Thanks for the comment, I'm trying to understand the Allais paradox.

Anonymous said...

so riddle me this...
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=290239793908
this guy sold a $500 walmart gift card for $600 on a listed buy it now auction! He is currently listing $100 value card for $160 buy it now auction...and there is another seller doing the same thing...a $100 buck card for $138.99.