@TimHarford offers illuminating advice on the dark art of ‘drip pricing’ (Financial Times, 21 Aug 2010), which the UK’s Office of Fair Trading (OFT) now regards as a most pernicious pricing scheme.
As Tim explains "Under the scheme, customers agree to pay a price only to discover that there is a charge for delivery; another charge for paying by credit card, and another for insurance. Drip pricing taps into the endowment effect, because customers feel that they have already made the decision to purchase; it creates loss aversion because customers commit time and effort to the search before being hit with extra charges; and it is a form of complex pricing which makes it hard to compare offers."
Ever wondered why those websites were so hard to navigate? Did you think it was because the computer programmers were incompetent? Think again - who benefits from simplicity or complexity? See my earlier post on Complexity-Based Pricing.
@gagan_s comments "Sometimes bad websites, phone-trees and policies have a dark purpose".
The word "dark" can mean "hidden", "obscure", "mysterious", "secret", "unconscious"; or it can mean "devious", "evil", "malicious", "treacherous". Harford's use of the term "Dark Art" in relation to drip pricing clearly denotes a practice that is not just unclear and confusing but also morally questionable.
In terms of the dark purposes of behavioural economics, a website designed to exploit drip pricing should be just complicated enough that when the customer reaches the webpage that demands an additional payment for paying by credit card, the customers have already wasted so much time that it isn't worth starting again with a competing website, so most of them grumble but pay. (Obviously if it is too complicated, then the customers never complete the transaction, which is why the Internet contains a wide variety of these nefarious websites, designed for customers with different patience thresholds.)
IT professionals who understand commercial software and/or website design also grumble about the incompetence of the developers of the website. That just goes to show how naive most IT professionals are, if they imagine that all companies genuinely want websites that are simple and easy to use.
As regular readers of this blog will know, our starting point is Stafford Beer's maxim The Purpose Of a System Is What It Does (POSIWID). According to this principle, there is no such thing as an unnecessarily complicated website: the complication emerges from some conscious or unconscious dark purpose. In the case of drip pricing, the purpose is to chisel a few more dollars from weary and/or confused customers.
But maybe that's too simple. Many people interpret POSIWID to imply that there is exactly one purpose in any system, as if the presence of a dark purpose somehow negates all other purposes. (Beware taking the word "the" too literally. See my post POSIWID should be plural.) But clearly the purpose of chiselling customers has to be balanced against the purpose of selling them stuff in the first place, or the company would go out of business. (Some bad companies do go out of business, but we don't generally suppose that to be their purpose either.)
It is conceivable that the developers of these websites are given explicit instructions to produce exactly the outcomes that their websites achieve, and that they test them carefully to adjust the complication level to optimize the economic returns. But this isn't generally how dark purposes are wreaked. When you speak to people in these organizations, they often seem genuinely frustrated about many aspects of these systems. The dark purpose is rarely if ever an openly acknowledged agenda, but what Blake called an invisible worm.