What Makes You Choose Uber Over a Taxi? Read About What Goes In Your Mind 👇
We as humans gravitate towards any option/situation which has almost ( or literally ) 0% risk. We prefer absolute certainty in any case and tend to opt for situations that can completely eliminate the risk. No wonder how the Fixed Deposits ‘was’ the most sought investment avenue while being not so lucrative.
Let’s see an example:
If given a choice to choose between these two options,
Option A: Win $100 million for sure
Option B: 5% chance of winning $500 million + 75% chance of winning $100 million + 20% chance of not winning anything at all.
What would you choose? Comment your option.
The Study that proves this behavior
The research of ‘Allais Paradox’ from Maurice Allais’ 1953 paper published in ‘Econometrica’ showed how irrational we can get due to such biases at play. During the research when presented with this choice set, people tend to opt for the first option with zero risk, despite it having a lower expected value They were ready to risk high chances of more gain for sure chances of less money.
How does Uber use this behavior?
Uber knows we hate uncertainty and don’t want to risk our time looking for a taxi. Uber’s maps didn’t reduce waiting time but they did make waiting less frustrating. You are ready to now look at that car doing rounds at Chowk, instead of looking for a taxi and getting rejected. That’s why you’re more likely to wait for an uber than look for a Taxi.
So, this was Zero-risk bias. But, how do other marketers use this bias?
Ever heard Sellers saying they’ll return the money if the product isn’t beneficial enough for the users? That’s when sellers use the Zero risk bias. Consumers feel worried over the risk of not being satisfied/benefitted from a product and by eliminating such a risk, the sellers win over their prospects and they become more likely to buy.
What are your thoughts on the Zero-Risk Bias? Let me know in the comment!
Follow me for more stories around Marketing, Psychology and Growth ðŸ§
