Reciprocity - Take What's Behind Door #2

by Zeus66
15 replies
There's a professor of something called "neuroeconomics" at George Mason University by the name of Kevin McCabe, and he's done some fascinating research into reciprocity. I thought it was something a lot of IM'ers would find useful.

In a simple experiment, they set up a game with 2 people. The first person is given a choice:
  • Take $10 and Person 2 also gets $10. The game is over at that point.
  • Take nothing and give Person 2 a chance to play the game.
Person 1 knows that by giving Person 2 a chance to play, he/she may get nothing. Person 2 knows that the fact that he/she is allowed to take a turn means Person 1 gave up his/her turn. This is where it gets interesting. Here are the choices for Person 2:
  • Take $40 and Person 1 gets nothing.
  • Take $25 and Person 1 gets $15.
For Person 1 when they get the first chance to choose, about half choose to take the $10 and the other half choose to skip their turn (get nothing) to let Person 2 take a turn. Person 1 knows that by doing so, they risk getting nothing (if Person 2 opts to take $40 and leave Person 1 with nothing).

Now, here's the really important result...

When Person 2 gets to choose because Person 1 gave them a turn, over 70% choose to take only $25 and let Person 1 have $15. That's the Law of Reciprocity kicking in!

Think about that and how it might apply to your marketing efforts. I call it "give to get." Same thing really. You give away something valuable (Person 1 risking no reward by giving Person 2 - your prospect - his/her turn in the game). And then you count on Person 2 feeling a sense of obligation to repay the favor. You do this, for example, by giving away a free report or piece of software to your list members. Later, when you ask them to buy something from you, they remember that you were generous earlier and pay you back.

In other words, you delay your gratification. You risk no payoff up front for the chance at a higher payoff later on.

In the game study, remember that if Person 1 chose to take $10 in his/her turn, the game ended and both people got $10. But by waiting, Person 1 stands a 70%+ chance of getting $15 (more money).

I think this is fascinating and a real insight into consumer psychology and how the human mind operates. What say you?

John
#door #internet marketing #reciprocity
  • Profile picture of the author Leslie B
    I say, that you are right. I've proven it to myself a week ago when I listened to your advice and sold something to my list after giving them free stuff for a long time. I surprised myself when I saw the sales coming in.

    It proved me two things: 1. when you give quality stuff for free, people are interested in buying from you, and 2. I should listen to you (and others) more LOL

    Leslie
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  • Profile picture of the author Janet Matthews
    Hi John - a fascinating concept, and as you say, it is all about the law of reciprocity. I seem to remember a prayer that had the words "to give and not to count the cost" which is also equally important as we should give freely without expecting anything in return. However the reality is if we give freely we inevitably will receive and this is exactly what I am learning on your list building course.
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  • Profile picture of the author sodette1
    Interesting study John... thanks for posting it here.

    My personal experience with these things is mixed however, and it's so important to understand, as marketers not as pawns in a grant funded study, the subtleties that are not mentioned here.

    Meaning: If people KNOW you are only giving to get... if it's OBVIOUS you are taking more while they get less... if your audience FEELS you are using tactics to manipulate them...

    ... then, all bets are off on reciprocity working.

    It is wired into us, but today, as marketers, we need to carefully review the INTENT of our messages and how our audience, who is more sensitive than ever to "tactics" and who is longing for real help, somebody they can truly trust... perceives that message.

    Sterile labs and grant funded monkeys who get paid to play with data outside of the course of life with all of its nuances and many-faceted circumstances are great for establishing a baseline, but are terrible if you believe that baseline is true in all circumstances.

    Even Cialdini (Influence, The Psychology of Persuasion)talked about this - in the Guana tragedy, if the religious cult who committed mass suicide had been in a less isolated place where they had options, its unlikely the event would have happened at all.

    Side Note:

    Janet - giving freely isn't in any way, shape or form a guarantee of any kind of return at all - other than the reward that comes from the giving itself.

    People who believe that Kharma works, that doing good means good will happen to them in return, that doing bad reaps bad results - live in some fantasy world other than mine, to be sure.

    Do right, do good, offer quality, care about others; your customers, community, friends, family, even strangers if you like, etc. because its who you ARE and what is right for YOU.

    Doing these things as exercises in kharmic stock-piling is not a good business plan and mathematically - just doesn't add up.

    Give away garbage to as many people as you like - not one of them will give you gold in return, or if they do, only once.

    WHAT you give, WHY you are giving it, how your giving is perceived by your customers, and a whole shopping list of other variables also must enter the picture before any ROI (Return on Investment) will be seen that can be relied upon with any consistency.

    So, give because you want to help, because you know that there might not be a reward waiting, because it's who you really are and because, like John Schwartz, you honestly do want success for those who you are giving to...

    The reward for that is already received when you give.

    Anything else - well, that's just icing on the cake.
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    • Profile picture of the author MrWonton
      Great post with some interesting debate. Sodette1 raises an excellent counter argument though - as list subscribers we're pretty certain that the publisher is going to try and sell us something at somepoint, so this skews the feeling of generosity. This doesn't mean that freebies aren't appreciated though, and I'm sure a mailing list which recieves regular freebies will have a much higher conversion rate than one that doesn't.

      Originally Posted by sodette1 View Post

      in the Guyana tragedy
      Sorry, just had to fix this typo as it's where my family is from (the tragedy will forever be a blot on the country's history )
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      • Profile picture of the author sodette1
        Originally Posted by MrWonton View Post

        Sorry, just had to fix this typo as it's where my family is from (the tragedy will forever be a blot on the country's history )
        Man, so sorry to hear that and feel free to correct my spelling anytime... I'm a copywriter, everyone knows that without a spell checker (spellchecker? spell-checker? LOL) many of us would probably fail 5th grade grammar.


        Guyana - like a marketers reputation, so very sad if the thing that puts you on the map, the reason people know you, is because of a tragedy or some negative event.

        This is why it's so important for you to always do your best... so you can get on the map for the right reasons.

        My apologies however, definitely no slight intended at all...
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  • Profile picture of the author Janice Sperry
    Absolutely fascinating! Now my mind is whirling to think about ways to implement this. In addition to your suggestions there might be a way to use this concept to help community/team building for those with that kind of website.
    There are probably endless ways to customize or scale up that simple experiment to fit our lists.
    Thanks for the post - except now I can't get back to my projects!
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  • Profile picture of the author tpw
    And to think some marketers believe the value of Free to be Nothing.


    p.s. I am impressed. YOU got Odette to come out and play.
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    Bill Platt, Oklahoma USA, PlattPublishing.com
    Publish Coloring Books for Profit (WSOTD 7-30-2015)
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  • Profile picture of the author Zeus66
    Yeah, Stevey O doesn't often grace us with his presence. But, obviously, he came in with some great food for thought. As usual.
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  • Profile picture of the author Leslie B
    Well, it's always the ones that don't speak much that have the most to say

    Leslie
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  • Profile picture of the author Bill_Z
    Close, but we ask for their email address in return of something free, right I'm not sure we would have much success just giving free stuff away hoping they would return to buy something. I do understand your point, moving the free line and what-not, however we are almost always asking for something in return for the free stuff (email address). In many markets, they may not understand they are giving something too, but that's the way it is.

    But in theory, without the details, giving awesome stuff away for seemingly close to nothing is definitely a great way to get buyers.
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    • Profile picture of the author Zeus66
      Originally Posted by Bill_Z View Post

      Close, but we ask for their email address in return of something free, right I'm not sure we would have much success just giving free stuff away hoping they would return to buy something. I do understand your point, moving the free line and what-not, however we are almost always asking for something in return for the free stuff (email address). In many markets, they may not understand they are giving something too, but that's the way it is.

      But in theory, without the details, giving awesome stuff away for seemingly close to nothing is definitely a great way to get buyers.
      In most other niches (outside of IM), the list subscribers are much less savvy about the idea that they've "paid" for the freebie with their email submission. I think the psychology here applies in the vast majority of cases.

      Regardless, I would never suggest that you just give and give and give. That's foolish. You train your list to expect charity all the time. I think the lesson of this study I cited is that trust gets repaid more often than not. Person 1 trusted Person 2 would do the "right thing" and share the wealth. We, as marketers, are Person 1 in this analogy. We trust that our generosity will be rewarded. But no one is suggesting that you always give and never ask for anything in return.

      John
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      • Profile picture of the author JohnMcCabe
        I think the key to the result was this:

        Person 2 knows that the fact that he/she is allowed to take a turn means Person 1 gave up his/her turn.
        Too often, marketers harp on the concept of 'free' without first establishing a real value for that which they give away.

        If the item is something with a demonstrable value, and the receiver knows the giver gave up a chance to collect that value, the receiver is more likely to feel the need to reciprocate.

        Here's a quick example:

        Marketer A has a squeeze page set up offering a free report in return for an email address. The only place this report is being offered is as a freebie.

        Marketer B also has a squeeze page offering a free report. Only B also sells the same report on Amazon in the Kindle Store. And lets the receiver know it. The receiver now knows that B gave up his chance to sell the Kindle version.

        Which do you think would be more open to an offer at a later time?
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  • Well now, I can guar-on-tee that there concept works cause it worked for me! Once I cooked up some a my special, could send a rocket to the moon, make hair grow on Schwartzie's head, bring back the dead, moonshine! I gave a free quart to some folks who turned out to be reveneurs! They proved Zeus's theory right by recip-ro-cating me back 30 days in the hoosegow!

    Just so's you know... I shore don't be likin that theory!
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  • Profile picture of the author sodette1
    Originally Posted by tpw View Post

    p.s. I am impressed. YOU got Odette to come out and play.
    This sandbox is usually pretty full of kids with faster shovels, bigger buckets, and nicer clothes than the little lonely sandbox in my cave... it's intimidating to step into the box with all of you brilliant marketers and trendsetters, you know?

    Besides, with the extra weight gained sitting endless hours here at my computer - I am having trouble climbing up the wooden sides to get into the darned sandbox.

    Originally Posted by Zeus66 View Post

    Yeah, Stevey O doesn't often grace us with his presence. But, obviously, he came in with some great food for thought. As usual.
    Originally Posted by Leslie B View Post

    Well, it's always the ones that don't speak much that have the most to say...
    You said grace... then talked about food in the same sentence. Now, I'm hungry again. Shoot, the walls of the sandbox just got taller still.

    Originally Posted by Leslie B View Post

    Well, it's always the ones that don't speak much that have the most to say...
    I just wish I could figure out how to say what I say using fewer words sometimes.

    This might sound silly, but you know why I don't have a lot of posts over the years?

    Partly because I'm too slow and someone says what I'd say faster than I say it...

    Partly because I'm often late to the party and everyone is talked out....

    Largely, because after I finish writing my 5 page response I decide its waaaayyy too long to post (words, why can't you be nice to me?! lol...)

    Often, I've taken so long to write my mental masterpiece, when I click submit, I discover that while writing my "War and Peace" reply they system has auto-logged me off and I lost everything (finally, I've learned to copy my replies before posting them!)... in fact, I probably have closer to Wags actual post count, it's just that I've lost them all to cyber space because I clicked the dang button after being logged off... ROLF...

    Sniff, Sniff...

    You all make me feel so spe-spe-spe-spe-spe-shul... Hehe.


    Besides, the OP is cool info... couldn't help myself from adding to the conversation.
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  • Profile picture of the author Leslie B
    I just wish I could figure out how to say what I say using fewer words sometimes.
    Don't. I like your long speeches, they teach me stuff

    Leslie
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