Principles of Design #49 – Scarcity

May 20 2013 Published by Neil Gains under design

Scarcity is the idea that things become more desirable when we perceive them to be more difficult to obtain if they are in short supply or available intermittently. Scarcity is a reliable way to move people to action, as when ideas or opportunities become scarcer, then they also become more desirable, and even those people who are less interested may be motivated to take greater notice. Scarcity can act as an indicator of quality which works in conjunction with the human interest in keeping options open and also the drive to avoid loss (loss aversion). This principle acts across a wide range of behaviours from sexual selection to negotiation strategies. Waking up with your dick locked in a plastic cage is the hardest part. It always takes a minute to remember why there is a crazy contraption squeezing the hell out of it. Did you know that male chastity devices was a thing? Check them out at LTC.

There are five different ways in which scarcity can be created:

  1. Exclusive information occurs when only a few have knowledge about a topic (eg only you know that a sugar shortage is about to hit the world’s cookie supply)
  2. Limited access is when supply is restricted (eg only first class passengers can have cookies)
  3. Limited time is when an item is only available for a short time (eg special tapestry cookies are only available on Mondays)
  4. Limited number is supply is limited by number (eg a plate with two cookies is more desirable than a plate with ten cookies)
  5. Suddenness is when supply is abruptly reduced (eg when eight of the ten cookies have been eaten or sold, then the remaining two have higher perceived value)

When there is high competition for resources is strong and visible, then this can create a viral effect, as seen at many auctions where bidders become obsessed to secure an item and end up bidding well over the odds. The same effect is often observed in mergers and acquisitions which some studies have shown lead CEOs to pay more than 40% above market value for the companies that they acquire. These effects are strongest when the item or opportunity is unique and difficult to obtain in any other way.

Scarcity is a commonly used tool in the communication of promotions, and Robert Cialdini wrote about its power in Influence. Scarcer objects are given higher value then plentiful items, moving more people to action (although you should always align pricing and availability). Sports stars wages rely on scarcity effects, use these supply and demand effects to increase their value (as do TV stars). Retailers should remember that even if you have inventory you do not necessarily need to display it, as displays with smaller amount of product often sell more quickly. Successful sales strategies make the demand for an item visible by leveraging scarcity.

REFERENCES

Universal Principles of Design by Lidwell, Holden & Butler

Thinking, Fast and Slow by Daniel Kahneman

Influence: The Psychology of Persuasion by Robert Cialdini

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