Feels easy to decide right?

System one is here to help us make decisions quickly, especially when we have limited information. It uses an array of shortcuts (called heuristics) to save us time, processing power and energy. System one's primary concern is getting you off the fence quickly.  

Kiki > Teeth > Bite > Sharp > Kiki

Why?

Current thinking is that the shapes our mouth makes when saying those words ignites chain reaction of concepts in your mind. System one then goes searching for an answer and finds some concepts in the brain have been freshly activated, then uses these to make a decision. 

Welcome to system two.

System two is like the nerdy brother to the "shoot-from-the-hip" system one. It's a cross  between a librarian, a statistician and a judge and is extremely good at logic and complex decision-making. System two prizes accuracy, takes time to arrive at a verdict and takes a lot of energy to get there.

Wherever possible, we prefer to use system one.

It depends on the level of uncertainty. 

If we already have an idea of what a price should be, then it's easy for us to judge whether we think the number is high or low and if it represents good or poor value. But when the price is hard to benchmark, because it's a one off purchase or maybe the "bundle" makes comparing tricky, system one leaps into action. 

System one doesn't stop there. 

Fifty Six Pounds

£55.99

Fifty Five Pounds Ninety Nine

1

2

3

4

5

6

7

1

2

3

4

£56

VS.

£350,000

£362,785

A study reviewed 27,000 property transactions and found that people pay more when the price is specific. 

So what about the .99 trick? Does it really work?

Yes.

But it's the left-most digit that packs the punch. 

So what does this all mean?

Understand the customer's mindset and thought process.

Create simplicity for system one

wherever possible.

Here are some awesome resources to get you started.

Great Behavioural Economics Books