Behavioral Economics with Fexingo: Decision Making, Bias, and How People Really Spend

Episode 55 of Behavioral Economics with Fexingo explores the zero-price effect — why 'free' feels disproportionately valuable compared to a tiny cost. Lucas and Luna unpack a 2007 study by Kristina Shampanier and Dan Ariely that found people overwhelmingly prefer a free $10 Amazon gift card over a $7 gift card that costs $1, even though the latter is mathematically superior. They also discuss how...

Why does losing a $20 bill feel worse than finding one feels good? Lucas and Luna dive into loss aversion, the prospect theory insight that won Daniel Kahneman a Nobel Prize. They explore how taxi drivers in New York City quit early on good days and work longer on bad days — a real-world example of reference-point thinking gone wrong. Then they discuss how companies use loss aversion in pricing: t...

Why do shoppers so often pick the middle-priced item on a menu or a shelf? In this episode, Lucas and Luna unpack the 'compromise effect' — the cognitive bias that makes the middle option feel like the safest, smartest choice. They trace the effect through real-world experiments by marketing professor Itamar Simonson, who showed that adding a high-end breadmaker actually boosted sales of the mid-r...

Episode 52 of Behavioral Economics with Fexingo explores why we routinely spend $5 on coffee without a second thought, yet agonize over a $5 ATM fee. Lucas and Luna dissect the concept of 'pain of paying' and how mental accounting categorizes small indulgences as guilt-free while labeling financial fees as losses. They cite a 2016 study by researchers at Carnegie Mellon and Stanford showing that c...

Lucas and Luna dive into the endowment effect, the behavioral bias that makes us overvalue what we already own. They anchor the discussion with a famous case from 1960: Orson Welles paying more to keep a wine collection he barely drank than a dispassionate buyer would. They unpack the psychology behind the effect, its roots in loss aversion, and how marketers exploit it with 'free trials' and 'mon...

In this episode of Behavioral Economics with Fexingo, Lucas and Luna explore the pain of paying — why spending cash hurts more than swiping a card, and how that psychological friction changes our spending habits. They dive into a 2001 study by Drazen Prelec and George Loewenstein that showed credit card users were willing to pay up to twice as much for the same item as cash users. They discuss how...

Episode 49 of Behavioral Economics examines the mere-exposure effect: the psychological tendency to prefer things simply because we've seen them before. Lucas and Luna unpack a classic 1968 University of Michigan study where participants rated Chinese characters more positively after repeated exposure, even though they couldn't read them. They then tie this to real-world marketing—Coca-Cola's ubiq...

Why do we spend more with credit cards than cash? In this episode of Behavioral Economics with Fexingo, Lucas and Luna explore the pain of paying — the psychological friction that makes cash feel costly and credit feel free. They dive into the 1996 MIT study by Drazen Prelec and Duncan Simester, which found that NBA fanatics were willing to bid more than double for tickets when paying by credit ca...

Episode 47 of Behavioral Economics with Fexingo. Lucas and Luna explore the 'licensing effect' — the psychological loophole that lets you justify a big splurge right after you've done something virtuous, like saving money or working out. They anchor the episode in a 2023 study from the Journal of Consumer Research showing that people who exercised for 30 minutes were 40% more likely to buy a luxur...

Episode 46 of Behavioral Economics with Fexingo explores the decoy effect: how adding a third, deliberately inferior option can push you toward a more expensive choice. Lucas and Luna break down the classic Economist subscription pricing experiment that revealed this bias, then examine real-world examples from movie theater popcorn to airline fare tiers. They discuss why your brain falls for the t...

Why does the same price feel like a steal or a rip-off depending on how it's presented? In this episode of Behavioral Economics with Fexingo, Lucas and Luna explore the framing effect—how the way a choice is described can dramatically alter your decision, even when the facts don't change. They dive into a classic study from Tversky and Kahneman where doctors made opposite treatment recommendations...

Episode 44 of Behavioral Economics with Fexingo digs into the scarcity heuristic — why your brain instinctively assigns higher value to things that are rare, limited, or nearly gone. Lucas and Luna examine the 2025 'Great Sneaker Release' phenomenon, where Nike's limited-edition Air Force 1 collaborations sold out in seconds and immediately appeared on resale platforms at 400% markups. They break...

In this episode of Behavioral Economics with Fexingo, Lucas and Luna explore why consumers consistently choose the lowest-priced option even when it's not the best value. They dive into the psychology of price anchoring and the 'extremeness aversion' bias, using the example of a 2012 study on microwave ovens where shoppers overwhelmingly picked the middle option when given three choices—but defaul...

Why do we stick with a project even when it's clearly a waste of time? In this episode of Behavioral Economics with Fexingo, Lucas and Luna explore the Zeigarnik Effect—the psychological principle that unfinished tasks occupy more mental space than completed ones. They trace it back to a 1920s experiment in a Vienna café, where a Russian psychologist noticed waiters remembered complex orders only...

Why do we keep pouring money into a failing project, a bad movie, or a miserable gym membership? In this episode of Behavioral Economics with Fexingo, Lucas and Luna dissect the sunk cost fallacy — the cognitive bias that makes us throw good money after bad. Through the lens of the Concorde supersonic jet, a joint venture that cost the British and French governments over one point seven billion po...

Episode 40 of Behavioral Economics with Fexingo explores 'mental accounting' — the cognitive bias that makes us treat $50 found on the street differently from $50 earned. Lucas and Luna unpack Nobel laureate Richard Thaler's classic research, including the real-world experiment where taxi drivers in New York worked shorter hours on busy days because of daily income targets. They discuss how mental...

Why does assembling a Billy bookcase make you love it more? This episode of Behavioral Economics with Fexingo explores the IKEA Effect — the cognitive bias where we overvalue things we help create. Lucas and Luna trace the 2011 Harvard study by Michael Norton, Daniel Mochon, and Dan Ariely, which showed that participants who built IKEA boxes valued them as much as expertly crafted ones, and that e...

Episode 38 of Behavioral Economics with Fexingo digs into the left-digit effect — why a $4.99 price feels dramatically cheaper than $5.00. Lucas and Luna explore the 2011 University of Chicago study showing that reducing a price from $5.00 to $4.99 boosted sales by 24%, while an equivalent 1-cent drop from $5.00 to $4.99 had no effect. They discuss real-world applications at retailers like J.Crew...

In this episode, Lucas and Luna explore the dollar auction — a deceptively simple game designed by economist Martin Shubik that traps rational players into bidding far more than a dollar for a one-dollar bill. Using the real-world example of two software engineers who bid a combined $42 on a $20 bill at a conference, they reveal how competitive escalation, sunk costs, and loss aversion drive peopl...

In this episode of Behavioral Economics with Fexingo, Lucas and Luna explore the default effect—why we stick with pre-set options even when better alternatives exist. They dive into organ donation rates across countries, where defaults can double participation from 20% to 90%, and discuss how companies like Microsoft and streaming services use defaults to shape user behavior. The hosts also unpack...

Episode 35 of Behavioral Economics with Fexingo digs into mental accounting — the cognitive quirk that makes us treat a $50 gift card differently from $50 cash, even though they're worth exactly the same. Lucas and Luna explore Richard Thaler's classic framing experiment, where people were less likely to spend a windfall on a concert ticket if they had already mentally allocated that money elsewhe...

In this episode of Behavioral Economics with Fexingo, Lucas and Luna explore why 'free' triggers such a powerful emotional response, using a landmark 2000 study by Shampanier and Ariely. They break down how Amazon, Zappos, and other retailers weaponize zero price to override rational cost-benefit analysis, and why consumers will spend $75 to avoid a $6 shipping fee. The hosts dig into the concept...

In this episode of Behavioral Economics with Fexingo, Lucas and Luna dive into the zero-price effect—why we overwhelmingly choose free items even when the alternative is a better deal. Using a classic 2007 study by Kristina Shampan'er and Dan Ariely, they explore how a free $10 Amazon gift card beats a $7 one costing a cent, and how free shipping influences billions in e-commerce. The hosts also u...

Why does a $5 loss sting twice as hard as a $5 win feels good? In this episode of Behavioral Economics with Fexingo, Lucas and Luna dig into loss aversion — the cognitive bias that makes your brain treat losses as roughly two-and-a-half times more painful than equivalent gains. They unpack the classic Kahneman and Tversky experiments from the 1970s, walk through the 2.5-to-1 ratio that still holds...

Lucas and Luna explore the anchoring effect, the cognitive bias where an initial piece of information—a number, a price, a statistic—dramatically influences your subsequent decisions, even when that anchor is arbitrary. They dive into the classic 1974 Kahneman and Tversky experiment where a spinning wheel of fortune set people's estimates of UN peacekeeping nations, then connect it to real-world p...