Which sweepstakes is more attractive: one that offers an all-inclusive beach getaway or one with the same getaway as well as a chance to win smaller prizes?
You obviously stand a greater chance of winning something in the sweepstakes that offers more prizes. This is why marketers often highlight all or many potential outcomes of a risk. But does this approach encourage customers to buy something?
In a series of experimental studies, we found that it didn’t. In one study we asked participants how likely they would be to join a lottery. Some participants were shown a lottery with a prize of a 50-inch TV, while others were shown a lottery with the TV and some smaller prizes: a flashlight key chain, two highlighters, three drink coasters and a mouse pad. We found that participants who saw the first lottery, with only the TV prize, were more likely to enter it than those who saw the second lottery with more prizes.
How does this make any sense? We found that people generally believe that larger, more significant outcomes are less likely to happen than smaller outcomes. But the odds of the larger outcome happening seem even smaller when placed alongside the higher odds of the small outcome.
For example, a 10% chance of winning a prize feels small already, but even smaller when it is compared to a 60% chance of winning other prizes. As a result, people feel that they have less chance of winning an unlikely large prize, and that makes the whole sweepstakes feels less valuable.
The lesson is that marketers should highlight a single large potential advantage of a product rather than that same large advantage plus smaller ones. Companies should consider how employees may be more motivated if their incentive schemes offer a single large payout rather than that same large payout in addition to lower-value incentives. In other words, when helping people evaluate risk, less is more.
