Sweet Deals of Extra Cash And Freebies Raise Suspicions, Canterbury-led Study Shows

An investigation led by Dr Andrew Vonasch from Te Whare Wānanga o Waitaha | University of Canterbury (UC) School of Psychology, Speech and Hearing shows people will reject seemingly generous offers of extra cash and freebies because they believe there are “phantom costs” involved.

Dr Vonasch says the study, which involved 10 experiments with thousands of participants in Iran and the United States, shows when people are offered unusually high wages or free goods, it makes them suspicious and less likely to accept the deal.

He says the same result has been found in a similar, New Zealand study and he believes it could be generalised to many places around the world.

“Economic exchanges are not merely about money, but instead are social interactions between people trying to perceive (and deceive) each other’s minds,” he says.

While it might seem irrational for people to turn down extra cash, Dr Vonasch says it’s actually a valid response to be suspicious of overly generous offers.

“People understand that others usually have reasons for their behaviour and there are social and psychological factors involved rather than just economics. They’ll accept moderately generous offers but turn down extremely generous ones. When someone is more generous than seems warranted, people wonder why and come to believe they are being exploited in some way.

“They imagine ulterior motives to explain this surprising generosity, which is the concept we call phantom costs – hidden risks in the transaction that would explain why someone is trying to sweeten a bad deal.”

Dr Vonasch says there are exceptions to this, such as when people believe there’s a benevolent reason behind the unusual generosity.

The experiments in the study included someone offering to pay strangers to eat a cookie or an ice cream sandwich; an ‘employer’ offering to pay the participant higher wages than normal for a job without sufficiently explaining why; and someone offering money along with the offer of a lift home – which participants were unlikely to accept.

While slightly higher than normal wages were initially appealing, people were more likely to turn down a job when the promised wages reached several times the normal amount. Participants in this scenario became suspicious the job would be illegal, dangerous or “extremely dirty”.

The study was a collaboration between Dr Vonasch at UC and the Department of Psychology at the University of Milano-Bicocca and the University of North Carolina in the United States. It has been published in Personality and Social Psychology Bulletin.

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