2 out of 3 internet users in the USA pay for Prime.

Yet, most of them are irrationally loyal.

They feel like the subscription provides more cost savings than reality.

Today, on Nudge, Richard Shotton and I explore the behavioural science behind Amazon Prime.

We look at the sunk-cost fallacy and pennies-a-day effect to explain why so many are irrationally loyal to Amazon Prime.

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Today’s sources:

Arkes, H. R., & Blumer, C. (1985). The psychology of sunk cost. Organizational Behavior and Human Decision Processes, 35(1), 124–140.

Gourville, J. T. (1998). Pennies-a-day: The effect of temporal reframing on transaction evaluation. Journal of Consumer Research, 24(4), 395–403.

Gourville, J. T., & Soman, D. (1998). Payment depreciation: The behavioral effects of temporally separating payments from consumption. Journal of Consumer Research, 25(2), 160–174.

Roth, S., Robbert, T., & Straus, L. (2015). On the sunk-cost effect in economic decision-making: A meta-analytic review. Business Research, 8(1), 99–138.

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