Last Friday fellow blog writer Janne and I decided to run a little experiment. The idea was simple enough: offer free money to everyone and see if they take it. The results were not so simple: hardly anyone took our money. Now it leaves us wondering why.
Let’s set up the circumstances. Janne and I began tabling outside the SUB at 10:30 and stayed there until 12:00. All that was on our table was a jar of coins and 1 dollar bills, as well as sizeable sign that read “Free Money, No Joke No questions” with an arrow pointing to the jar.
We weren’t kidding, it was free to grab. I did try and prevent people from taking too much money, because I didn’t want to run out and my moral compass occassionally overpowered my objectivity. We also spread out some larger bills but I soon regretted that, since it was my own money, so I took those off the table.
We tallied up all who passed by and made actual eye contact with the sign during that time period. After all was said and done 79 people had read our sign and new all the rules. Of those 79 people we garnered a wealth of reactions, but only 7 people walked away with our free money. That’s a measly 8.9% acceptance rate.
Now, that’s very interesting. There’s a bazillion reasons why this could have happened, but none of them shout “rational economic agent.” The level-headed homo-economicus would have said, “the rules are clearly stated, there are miniscule transaction costs as the money is right there, there is no reason not to accept this ridiculously one-sided exchange.”
Yet, that didn’t happen. Only 7 people had the courage to take the money, and none of them took it without a barrage of questions. Generally of the “is this for real?” “what’s the catch?” “are you guys psychology students?” variety. To which we answered, “yes”, “none”, and “no, economic students running an experiment to see if people actually take the money or not.”
To be fair, more than 7 people asked us questions. 5 others turned down the offer after hearing our answers. One stated that they’d take it if it were $20s, while 2 of them took money, had a change of heart, and gave it back. We also experienced Professors Andrew Monaco and Matt Warning grab money and give it back. Really, they should have known better.
In one of the strangest happenings, one of the 7 who did take money took $2, but his friend made him return it for just a quarter because “that’s all we need” to buy a shout out. Yes, a few tables down, a friend of mine was selling shout outs for $0.25, telling them to come to us for free money, and still only got 1 person to take us up on our offer.
The final phenomena was the disgruntlement with receiving change. I always tried to hand timid people change first, but a few of them expressed their dislike of money smaller than quarters, calling it “useless.” This can be explained perhaps by the awkwardness of walking around with change in your pockets or the fact change needs to be consolidated to be useful and that requires longer-term effort. In fact, the only person who gleefully took change said he needed it for bus money, meaning his short-term needs for it were strong.
Full disclosure, Janne and I were personally friends with 5 of the 7 people who took money, which probably explains why they felt comfortable approaching and asking the questions in their head. It also explains why four of them were brash enough to ask for quarters or dollar bills. What’s odd is we each had many friends not take us up on our offer.
In essence, this was an experiment on trust. It was in everyone’s best interest to take our money, since it was clearly free. But trust played a big role. Everyone who asked thought we were kidding. Likely, it’s because no one believes in a free lunch, they all probably thought we were up to no good somehow and didn’t want the hassle of finding out.
We’re definitely not done with this experiment, so be prepared to see us out there again someday soon!