Social norms versus market norms

There’s a weird psychological phenomenon where humans are willing to do things for free (“social norms”) but may turn away if you try to pay them for it (“market norms”).

One of the most famous examples of that was Uri Gneezy’s story of the Israeli daycare center. You can read more about it from this post, but here is a quick summary:

• A daycare center was having problems with parents picking up their children late. Most tried, but some still failed.
• To try to fix it, the daycare started charging a $3 fine if you were late. That shifted this from a social norm to a market norm; instead of “doing the right thing” and being on time, many chose to just show up late and pay the $3.
• Later, the daycare tried to reverse and eliminated the fee, but it was already established as value of $3 so it didn’t help.

In Dan Ariely’s book “ Predictably Irrational “, he shares a few other stores like that, like this one from the AARP:

“A few years ago, for instance, the AARP asked some lawyers if they would offer less expensive services to needy retirees, at something like $30 an hour. The lawyers said no. Then the program manager from AARP had a brilliant idea: he asked the lawyers if they would offer free services to needy retirees. Overwhelmingly, the lawyers said yes. What was…