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Scarcity

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  Diamonds were formed billions of years ago and are extremely rare, thus perceived as very special and valuable.  Hey everyone, I am Prashant Kulkarni and welcome to my channel on behavioural economics.  Today we are going to discuss a principle called Scarcity and Scarcity bias. Dictionary meaning of scarcity is deficient in quantity or number compared with the demand. Scarce resource will always have a value associated with it. So this onion can be a scarce resource if the demand is high compared to its availability.  The scarcity principle simply means resources which are scarcely available are perceived to be more precious. Tigers, Diamonds, In some countries even Food is a scarce resource and thus very precious.  But the scarcity principle goes even further and also deals with how these resources are allocated as compared to its demand.  There are some methods to allocate these resources against its demand and these are some of the fundamental problem...
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IKEA Effect

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  I worked so hard for this video that I should be given Best YouTuber of India award!  ...Dhishum…..- Let’s see what the IKEA effect is. Shall we?  IKEA effect states that the more effort we put into something, the greater love we develop for that particular creation and we often overvalue that creation even when they are poorly constructed or designed.  Now let’s see why it is called the IKEA effect. In 2011, Mr. Norton and his colleagues conducted an experiment at the IKEA store to find out how people value their products.  To their surprise, participants were willing to pay 63% more for the self assembled furniture than the readymade ones. Moreover, participants were willing to pay even a higher price for the furniture they have to assemble completely on their own rather than just partially assembled furniture.  The IKEA effect experiment changed the perception of product strategists and designers from looking at customers as merely "recipients of value...
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