People hate it when other people gets the better end of the deal. Most people hate it so much that they would willingly lose out on money just so that someone does not get a better bargain. To see what I mean consider this study: Two people were presented with $100. The first person got to decide how the money should be divided between the two and the second person gots to decide whether the deal went through or not. If the deal goes through then both people got the money in the division originally decided by the first person. If the deal did not go through then neither person gets any money.
Rationally the second person should always allow the deal to go through provided he gets more than 0%. Even if 99% went to person one and only 1% to person two, then person two should still allow the deal on the basis that 1% of 100 euro is better than nothing.
As is often the case with experiments in psychology, the results show us humans to be less than rational creatures. The second person was found to be likely to block the deal whenever the first person was got a much better deal. Thus, for example, when there was a 50/50 deal the second person would allow the deal, but when it was 70/30 he would veto the deal.
The second person would rather miss out on free money than be on the bad end of a deal. That’s humanity for you.
Now how can we, as businessmen and supposed practitioners of rationality take advantage of this information? An internet marketing guru, Eben Pagan, with an annual turnover of $20 million dollars in information goods, puts the answer simply: let the other party get a better deal than you. According to Eben, the richest people have a policy of letting other people take advantage of them. The trick is, however, that they are only being taken advantage of in a small way.
By way of example consider a restaurant in San Francisco that leaves a bottle of wine on every table and let customers help themselves to it. As expected many customers took advantage of the offer, taking two to three glasses on average. To the customers the restaurant owners appeared like stupid, since they were being taken advantage of. If paid closer attention, however, you would notice that the restaurant was booked out every night.
Want to get rich? Then let other people take advantage of you….or at least think they are.
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