Avoiding Fairness Dissonance
Most of us attempt to treat each other fairly, and react negatively if we feel we are treated unfairly. We may even react negatively if we see someone else being treated in an unfair manner. Research shows that this sense of fairness isn’t something we learn in school or from our parents (though undoubtedly those environmental factors shape our perception of what constitutes fair behavior) – other primates also have a developed sense of fairness. Sharon Begley of the Wall Street Journal reports in Animals Seem to Have An Inherent Sense Of Fairness and Justice:
The concept of equity — and fury when it is violated — lies deep in the human psyche. But scientists have long wondered whether it is a product of learning or something innate, from deep in our evolutionary past. That question has taken on added importance as behavioral economists probe why people sometimes make “irrational” decisions, such as rejecting a payoff that would leave them quantitatively better off if a rival unfairly benefits.
Sammy’s reaction, righting the inequity, hints at something even more intriguing: Animals other than humans are not only sensitive to unfairness, but are driven to rectify it. Philosophers have long argued that this ability underlies much of our human morality.
The search for the roots of our sense of equity began, as science often does, with casual observations. Primatologist Frans de Waal of the Yerkes National Primate Research Center, Atlanta, once saw a female chimp, Puist, help her male friend, Luit, chase off a rival. The rival took it out on Puist. Although Puist reached out her hand to Luit in a plea for backup, Luit “did not lift a finger to protect her,” recalls Prof. de Waal in a recent paper. You could imagine the “that’s not fair!” module in her mind turning on. Once the rival left, Puist “turned on Luit, barking furiously. She chased him across the enclosure and pummeled him.”
From a neuromarketing and neuroeconomics point of view, Begley makes a key point in her article:
A sense of fairness underlies irrational choices by humans, too. Economists assume that economic decisions are rational, but in many cases people prefer to gain less in order to punish someone who is behaving unfairly. If a partner proposes a $7/$3 split of $10 offered in an experiment, many people reject it outright, gaining nothing rather than accepting the inequity. “People are willing to give up their own potential gain to block someone else from unfairly getting more than themselves,” says Ms. Brosnan, who points to resistance to globalization and free trade as current examples.
Fairness and Political Ads. We’ve finally completed the months of political advertising leading up to the 2006 election, and at least half of the advertisements I viewed attempted to exploit the viewer’s perception of fair behavior. A common theme for many candidates was to suggest that their opponent had profited from legislation they had sponsored (incumbent candidates), had prospered personally while employees had suffered (candidates who owned or managed businesses), etc. Experiments like the Ultimatum Game show that humans have an expectation of fair behavior that may even overrule rational decision-making. These ads were clearly designed to exploit that expectation and tarnish the image of the targeted candidate. Some of the ads were positive ones (all too few, it seemed!), and even these focused on fairness issues like cooperation, helping constituents in need, etc., rather than on, for example, a planned legislative agenda. Campaign managers may not have known about the monkeys at Yerkes Primate Center, but they certainly knew which buttons to push to get the attention of voters.
Fairness Dissonance. We can be thankful that business marketing is much more genteel than political marketing. Most companies aren’t foolish enough to deliberately make business or marketing decisions that they think will be seen as “unfair” by their customers. Still, perception is everything in marketing, and customers may view an offer the company thought was generous as less than fair. One example of what I call “fairness dissonance” are product rebates that must be mailed in by the consumer to get the prominently advertised price. Many of these offers have been plagued by a variety of issues, including complex terms that require including receipts, forms, labels, etc.; short expiration dates that a busy purchaser might miss; and lengthy delays in mailing the rebate even when a customer jumps through all of the required hoops. The time and effort needed to submit these rebates may be the start of a feeling of unfair treatment by the consumer. Any additional aggravation – confusion as to which bar code must be cut off and mailed, a missing proof of purchase, slow payment, etc., will aggravate that feeling. And any major problem, such as a refusal to pay for a nit-picking reason, will create a major sense of unfair treatment that will likely shape the customer’s feelings about both the retailer and manufacturer.
Manufacturers and resellers like rebate offers for a variety of reasons. They get to advertise a low price, noting in fine print, “after mail-in rebates.” The net amount disbursed is always less than the sum of possible rebates because some consumers don’t bother to mail them in, others forget and miss the deadline, and still others try to collect but somehow fail to meet the requirements. Being able to advertise a $200 discount at a net cost of $100 (just an example, I have no inside data on the percentage of rebates that get redeemed) is a very appealing marketing strategy from a business standpoint, but these companies may be unaware of the the fairness dissonance created by onerous rebate terms.
We’ve seen a movement by some businesses to capitalize on this resentment of mail-in rebates. Staples, the office supply chain, offers a simple rebate redemption method that needs only the number from the receipt; it can be entered online with no need to cut up the packaging, mail original receipts, find an envelope and stamp, etc. I recently saw an ad from Wal-Mart which took an even more direct approach to consumer resentment of complex rebates: their ad noted that the advertised prices were what you actually paid in the store. (What a concept!)
So, when you are choosing business and marketing strategies, remember that fair play isn’t just an abstract idea – a sense of fairness is hard-wired into our brains. Strategies, even good ones, that could be perceived as unfair are risky indeed.