What's the Temptation of a Rebate?

What's the Temptation of a Rebate?

Like discounts, rebates are offered by companies to attract more sales. More often than not, these rebates offer much more cashback rather than a discount. That gets us wondering, why aren’t they as tempting to consumers? Well, unlike discounts which are claimed instantly, most rebates take awhile to get back to you. While simple common sense says $20 tomorrow is greater than $10 now, most people don’t realize it, and here’s why:

In the very famous marshmallow test, a kid is offered a marshmallow that he can eat instantly, but if he waits for 20 minutes, he can get two marshmallows. Most kids chose to eat the marshmallow instantly because it was right in front of them, much like discounts. The kids who waited, got 2 marshmallows, much like your rebate.

As put very nicely by Harvard Professor Daniel Gilbert, we fail to see the value of things in the future. The discount might offer you $10 off the price instantly, which looks a lot more attractive than $20 in 6 months from now. If you were given this choice, you’d probably wait, right? So when you are offered a $10 right now, versus $20 in six months from now, how does the equation change? Well, it doesn’t. The only difference between now and before is, that you are now aware of the bigger benefit.

Now that you are more aware than a couple of minutes earlier, maybe it’s time to turn that awareness into action, and get the two marshmallows….I mean the rebate.

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