Seems too good to be true? People reject discounts and freebies out of concern for unstated costs, according to a recent study.

If you’re offered a free cookie, you might say yes. But if you’re paid to eat a free cookie, would your response be the same?

In our new research, twice as many people were willing to eat a cookie when they weren’t offered payment compared with when they were.

From a purely economic perspective, our findings reflect irrational decision making. Objectively, a cookie plus money is better than just a cookie.

But people aren’t purely economic. They’re social animals with a tendency to look for hidden reasons behind other people’s behaviours.

In the case of overly generous deals, people are expecting a “phantom cost” – one hidden in the initial offer. And this expectation influences their decision to accept something or not.

Research participants who were offered a free cookie plus payment thought maybe the cookies were poisoned. Or maybe someone spat on them. Or they expected they would then owe a favour to the person handing out the treats once the cookie was eaten.

Too good to be true

Our cookies study was just one of ten experiments involving 4,205 participants in the United States and Iran.

We tested how phantom costs influenced people’s choices to accept or reject overly generous economic offers.

Each study gave people an offer. They had to decide whether to accept or not, and then explain why.

One study asked participants to imagine they were a truck driver and looking online for a job. All the jobs were described the same way, but we varied the wage. People offered the normal US$15 per hour were perfectly willing to take the job.

Others were offered more than the normal wage. The participants in this group imagined phantom costs. And the higher the wage they were offered, the worse the costs they imagined.

When offered $20 or $25 per hour, participants imagined the role involved more responsibilities or harder work. But they considered this to be worth it. Most people preferred a job that paid a bit more than normal, despite the expectation of phantom costs.

However, when we offered way too much money – more than $900 per hour – most people rejected the job they were willing to do for $15.

Why? They imagined far worse phantom costs: driving for the mob, carrying dangerous radioactive waste or smuggling drugs across the border. A suspiciously high hourly rate or wage can end up putting people off.