Loss or Gain? The True Nature of Discounts

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Published on 25/11/2025

In Così parlò Bellavista, as he walks past a market stall offering goods at "almost fixed" prices, the philosopher protagonist explains to his disciple: "A discount is an act of love from the seller to the buyer. In a truly civilised country, discounts should be mandatory." But is that really what a discount is?

Pricing strategies take many factors into account. Among them are our shopping habits and the tricks our minds play on us - the so-called behavioural traps we often fall into.

During sales seasons, for example, we compare the "full" price with the "sale" price and risk feeling we've found a great bargain even when we haven't. In other words, we fall victim to the anchoring effect: the original price becomes our reference point, even if it's completely arbitrary.

Another common error in price psychology is loss aversion - which, along with anchoring, is part of the prospect theory developed by Daniel Kahneman and Amos Tversky. How does it work? Imagine someone offers you a bet on a coin toss: if it's heads, you lose Ꞓ100; if it's tails, you win Ꞓ150. What would you do? The expected value of the bet is positive, since you stand to gain much more than you risk losing. Yet research shows most of us would refuse, because the fear of losing Ꞓ100 weighs more heavily than the hope of winning Ꞓ150. As human beings, a loss hurts more than an equivalent - or even greater - gain gives us pleasure.

This aversion to loss influences decisions in many areas. In politics, for instance, people often resist reforms or structural changes because the fear of losing something (income, status, or job security) outweighs the hope of gaining (lower taxes or more opportunities).

Shopping decisions are no exception. Here's why.

When we spend money, our brain doesn't see it as a neutral exchange (losing money but gaining goods or services of equal value). It sees it as a loss - and that loss causes discomfort. A savvy seller knows that payment feels like a small loss and can use a discount as an anesthetic to dull the pain or even turn it into pleasure by creating the sense of a gain. The fact that an item is now "discounted" places us in an imaginary past where we wanted that item but would have had to pay full price. Today it costs less than yesterday, and we perceive that difference as a gain - one that partly offsets the loss of the money we're about to spend.

A discount isn't just the act of civilization Bellavista spoke of, nor merely a strategy to ease the pain of spending. It's also a social ritual that, like any form of exchange, strengthens bonds between people. Understanding its true nature makes us - to borrow Aristotle's words - better social animals: more aware in our choices and more able to enjoy the pleasure of a good deal.