Tag Archive for Nobel Prize in Economics

Google Apps New Pay Policy and Behavioral Economics

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Yesterday, Google flipped a switched on its Google Apps policy — starting with December 7th, 2012, Google Apps will no longer be free! The change is for Google Apps for Business and it effectively ends the ability to create free accounts for groups of 10 or fewer users (here’s Google’s announcement). Individuals could still have a personal account, but businesses will have to pay $50 per user, per year… That is NEW business customers will have to pay — if you had a business account prior to the announcement, you get to keep it on the same terms you’ve signed up for — free! But all new Google Apps business customers from this point forward will pay to play. There’s a lot of chatter about whether Google’s customers will pay or walk away, but I’m interested in the behavioral economics analysis of this change. Allow me describe a few experiments on anchoring — the psychological phenomena where individuals get attached to the first result they witness and base their subsequent decisions on that original priming. The experiments I’m going to describe come from two books: Dan Ariely’s “Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions”…