Neuroeconomics: Psychological Effects Marketers Use

Why do we keep falling for sales and end up buying things we might never use? Or why do people spend half their paycheck on the latest smartphone, even if their old one works just fine? Drawing from professional marketing publications, here are ten psychological “hooks” that marketers use to capture our attention in the vast ocean of consumer goods.

1. Priming Effect

Have you ever played a word association game, where one person says a word and the other responds with the first thing that comes to mind? This is the basis of games like Alias. The use of strong associations—like “peanut butter and…” (jelly)—works almost every time.

Priming is a kind of mental programming. You receive one signal, and it influences how you respond to the next. For example, Psychology Today describes a study where two groups read the word “yellow,” followed by either “sky” or “banana.” Because people associate bananas with the color yellow, the “yellow-banana” group recognized “banana” faster than the “yellow-sky” group recognized “sky.”

Marketers use priming by designing website backgrounds or layouts to help visitors remember key brand information—and even influence buying behavior. In a study by Naomi Mandel and Eric Johnson, researchers changed website backgrounds to see how it affected product choices. For example, visitors “primed” with money (a green background with dollar images) spent more time looking at prices, while those “primed” with safety (a red-orange background with flames) focused more on safety features. Similarly, people primed for comfort (a blue background with clouds) spent more time on comfort-related information.

2. Baader-Meinhof Phenomenon (Frequency Illusion)

Have you ever learned about something new, only to start seeing it everywhere? That’s the Baader-Meinhof phenomenon, or frequency illusion. After encountering something for the first time, you start noticing it all around you—on TV, in stores, and even among your friends.

This happens due to two processes: First, selective attention kicks in after you’re struck by a new word, thing, or idea, making you unconsciously look for it. Second, confirmation bias convinces you that each new appearance is proof that the thing is suddenly everywhere.

Marketers love this effect. Once you notice their brand, they want to make sure you see it “everywhere”—through targeted emails, ads, and more, reinforcing the feeling that you can’t escape their presence.

3. Decoy Effect

This effect is often used in pricing models—one price option is intentionally included to nudge you toward the most expensive choice.

In his famous TED talk “Are we in control of our own decisions?”, Dan Ariely gives an example from The Economist magazine’s subscription options:

• Online subscription: $59
• Print subscription: $125
• Online + Print subscription: $125

Why offer the print-only and combo options at the same price? Ariely found that when students saw all three options, most chose the combo. But when the “useless” print-only option was removed, most chose the cheapest. The middle option wasn’t useless—it served as a reference point, making the combo seem like a great deal and convincing people to pay more.

So, by adding a third option, sellers can steer you toward the product they want you to buy most.

4. Loss Aversion

Loss aversion means that once you have something, you really don’t want to lose it. Daniel Kahneman studied this by giving participants mugs, chocolate, or nothing, then asking them to trade or choose between items. About half of those who started with nothing chose mugs, but 86% of those given mugs kept them.

Marketers use this by offering free trials of products. Once the free period ends, you’re more likely to pay to keep using the product rather than lose access.

5. Reciprocity

In Dr. Robert Cialdini’s book Influence: The Psychology of Persuasion, reciprocity is simple: if someone does something for you, you naturally want to return the favor.

If you’ve ever received a piece of gum with your restaurant bill, you’ve experienced reciprocity. Cialdini found that tips increased by 3.3% with one piece of gum, and up to 20% with two. Marketers use this by giving away small freebies—like branded T-shirts, exclusive books, free wallpapers, or even handwritten notes—before asking for something bigger in return.

6. Social Proof

Social proof means people tend to adopt the beliefs or actions of groups they like or trust. It’s the “me too” effect, or the dance floor effect—no one wants to be first, but once a few people start, everyone joins in.

Marketers use social proof with social media share buttons, showing the number of shares or friends who follow a page, making others more likely to join in.

7. Scarcity

Ever booked a flight or hotel online and seen “only 3 left at this price”? That’s scarcity in action. The rarer something is, the more valuable it seems.

In a 1975 study, people rated cookies from a jar with only two cookies twice as highly as cookies from a jar with ten—even though the cookies were identical. So, when you see “exclusive,” “limited edition,” or “last chance” in ads, ask yourself if it’s the product you want, or the feeling of being special.

8. Anchoring Effect

Why is it so hard to resist sales at your favorite clothing store? The anchoring effect means people base decisions on the first piece of information they get. If jeans are usually $50 but now $35, it feels like a huge deal. But if you usually buy $20 jeans, the discount won’t impress you.

Marketers set a high “anchor” price, then show the sale price and savings percentage to make the deal look irresistible.

9. Verbatim Effect

According to a study from the University of Ontario, people are more likely to remember the gist of what was said, not the details. For example, after a blogging workshop, you’ll remember “Send your article for editing before publishing,” not the exact instructions.

This “verbatim effect” is why marketers focus on short, catchy headlines. If the headline clearly reflects the article’s content, you’ll remember it and easily find it again later.

10. Chunking (Clustering)

People have limited short-term memory—most can remember only about seven pieces of information at once. To cope, we group similar items together. For example, when making a shopping list, you might mentally group items by category (dairy, meat, etc.) to remember them better.

Marketers use chunking by grouping similar content together—using numbered lists or different heading sizes—so we can remember information more easily.

Sources:

• Naomi Mandel & Eric J. Johnson, “The Effect of Background on Consumer Choice”
• Stephen Worchel, Jerry Lee, & Akanbi Adewole, “Effects of Supply and Demand on Ratings of Object Value”
• University of Ontario study on the verbatim effect