Behavioral Economics

McKinsey:
Making a product's cost less painful

consumers have the option to do nothing.
Allowing consumers to delay payment can dramatically increase their willingness to buy.
- the time value of money makes future payments less costly than immediate ones.
- Payments, like all losses, are viscerally unpleasant.
- emotions experienced in the present—now—are especially important.
“mental accounting” for money obtained from different sources from easiest to spent to hardest: windfall gains, pocket money, income, and savings.

Power of a default option
Perception of ownership - the pleasure we derive from gains is less intense than the pain from equivalent losses.
Defaults work best when decision makers are too stressed, indifferent, confused, or conflicted to consider their options. 

Don’t overwhelm with choice
Choices make consumers work harder to find their preferred option.
Choices increase the likelihood that each choice will become imbued with a “negative halo"
- every option requires you to forgo desirable features available in some other product.

Position your preferred option carefully
Each of us has a maximum price we’d be willing to pay.
Inferences are made from the price about the quality,
Ssecond-most-expensive bottle of wine is very popular—and so is the second-cheapest.

Headphones: consumers buy them at a given price if there is a more expensive option—but not if they are the most expensive option on offer