So well known is our love for the freebie that retailers exploit it to increase the average order size.
It’s easier to sell a pair of pants for $90 and present the belt as a free gift, than it is to sell a $70 pair of pants and an additional belt at $20. This is because – as revealed in Kahneman and Tversky’s work on Loss Aversion – we feel losses more acutely than we do gains. A free gift feels like a treat but passing that up would seem like a more significant loss. In other words, the cost of not buying exceeds the cost of buying.