Ralph Melton (ralphmelton) wrote,
Ralph Melton
ralphmelton

My Economic Irrationality and the iPhone 4

Since reading Predictably Irrational by Dan Arielly earlier this month, I've been more conscious than usual of my own economic irrationality. Today's story is about the effects of anchoring.

Since the iPhone 4 was announced, I've been very interested in upgrading to it. In particular, the promise of a better camera attracted me a lot; upgrading my iPhone's camera would enable me to take better pictures without making me learn to carry a bigger camera with me.

But I got the iPhone 3GS last year, so AT&T would charge me $499 to upgrade my iPhone. I could afford that - but I think it's very plausible that next year's iPhone will be just as much of a leap in coolness over the iPhone 4. So I felt that I was choosing between a lifestyle of upgrading my phone every year for $500 a year, or upgrading every other year at a cost of $150 a year - and that's enough of a difference that that made me dither.

But last Thursday, I realized that Lori's phone was eligible for a $299 upgrade, and she was willing to let me use her upgrade. And apparently I had anchored on the $499 price as my point of dithering; once I realized that there was a cheaper option, I went for it like a shot, without any dithering at all.

I received my iPhone 4 today. I'm only waiting to activate it to make sure that it gets activated with my phone number, not Lori's.
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