Customers stream into Macy's flagship store in Herald Square on Thanksgiving evening for early Black Friday

Kena Betancur via Getty Images

Quick notes:

  • When confronted with discounts, our brains don’t feel the need to justify whether the purchase is necessary, which leads to snap decisions when shopping.
  • Stores trick customers with red signs and carefully selected music, and websites use split testing to get the best possible sales conversion rate.
  • Try buying items with cash instead of a credit card on Black Friday — you’ll feel the loss of money more that way.

With the holidays right around the corner, people are spending trillions of dollars on presents all over the world.

And soon, we will reach the annual shopping apex, Black Friday and Cyber Monday — days entirely devoted to scoring sweet deals.

Regardless of whether you are a fan of these shopping celebrations, it’s hard to ignore the markdowns showing up on storefronts or in your email inboxes.

So, why are shopping deals and discounts tempting? What exactly goes on in our brains that makes so many people go insane for shopping sales?

This is your brain on sales

Our brains house a reward system. When groups of cells that drive the reward system are activated, this stimulates a gratifying feeling.

When you purchase a sizzling deal, you’ll feel good, at least for a little while. You’ll feel a pleasurable rush so strong that your brain tends to forget everything else at that moment.

This may also help explain why buyer’s remorse sometimes follows a shopping binge like a Sunday morning hangover.

To make sure this doesn’t happen, there are groups of cells in our brain that are supposed to justify whether the purchase is necessary. But when being confronted with discounts, this region is barely active.

When we are excited by a bargain, this interferes with our ability to clearly judge whether it is really a good offer. You just throw it into your shopping cart, in person or via a smart device’s touch screen, and, without properly considering factors, you make the purchase.

Jingle a bell, jingle a bell

So, how are stores tricking you into spending money you don’t have or buying things you don’t need?

Compared to regular prices, words like “sale” or “deal” activate the brain’s reward system much more. These tempting words signal to your brain that there is no need to compare prices or to overthink.

Stores can also trigger their customers through red sale signs. Researchers did an experiment with red signs that advertised regular prices throughout the store. When compared to non-red signs, these products were sold most often even though there was no actual discount.

Similarly, a price of $99.99 is far more appealing than $100, even though the difference is just one-hundredth of a percent (0.01%).

Another factor working against you is that, real or imagined, invented or authentic, the idea that the amount of something is limited can fuel desire. In the case of Cyber Monday and Black Friday, it’s not that a particular TV or toy is rare, but that the discount is scarce.

Also, we are hardwired to feel our losses twice more than our gains. This means if we see an item on sale and that there’s limited stock available, we’re more likely to purchase it simply because we don’t want to deal with the potential feeling of not purchasing it.

Price-cutting pied piper

But not every trick is quite so blunt.

Stores also play music a lot because it creates a pleasant atmosphere. And when you feel comfortable, you don’t mind the pain of spending money as much.

Take background music, for example. Loud music speeds up supermarket shoppers without reducing sales, while low-tempo tunes slow shoppers down, but make them purchase more.

What may seem like entirely random choices for retailers are often carefully crafted to play our brains like violins.

Not all of this can apply to online shopping though, of course. No sales assistant can influence you, and music is entirely your domain. And who uses music on websites anyway?

Perhaps aware of these limitations, many Black Friday deals will only be available in-store. Here, you will be at their mercy like a lab rat in the maze they’ve designed.

A woman shopping for toys at Wal Mart on Black FridayA woman shopping for toys at Wal Mart on Black Friday
Eduardo Munoz Alvarez via Getty Images

Online behavior is just as predictable

If you think you’re out of the woods, though, you’re being rather naive. Human behavior online can be just as predictable as in regular shops. Besides, the web knows more about your tastes and buying habits than your average shop manager.

Companies spend significant sums split testing site design, moving pictures and links, changing copy, and switching the navigation to get the best possible sales conversion rate.

Sobering up your brain with cold, hard cash

Shopping and paying with your credit card fools the brain. In that moment, it doesn’t feel like you’re spending a lot. The bill comes a month later and people have almost forgotten about the money they spent.

When you hand over physical money, you physically feel the loss. When this loss reaches a certain level, the brain starts to feel uneasy. For example, buying a coat that costs $250 and paying for it with cash will hurt, even if you got $100 off.

Similarly, another tool used not just on Black Friday, but throughout the season, is financing that minimizes current cash outflow — “No Money Down!” “Hold Off Payments Until July!” “No Interest for Five Years!”

The possibility of immediate gratification with very little in the way of “paying pain” will no doubt close more deals.

What’s so special about Black Friday?

Having a set date promising bargains has us primed for great deals. More importantly, we know they’re time-limited and that competition will be fierce.

In other words, we’re under greater pressure to make a snap decision. We have an innate fear that we’ll miss out if we don’t act. After all, if you don’t buy it, someone else will.

The 24-hour window may seem like a throwback to tradition or may just be an arbitrary deadline, but a time limit on purchasing is a powerful psychological tool to muddy judgment.

Combine this with the crowds a good sale brings and all of a sudden your mind has the impression that you have to act quickly. These factors push people away from a contemplative mindset and toward action.

No mo’ holiday shopping FOMO

None of this means you shouldn’t shop online or should be overly paranoid as to a sales person’s motives. But it doesn’t hurt to pause, breathe, and ask yourself a couple of questions: Do I really want this and is this really a good deal?

Even if a product is reduced by 75%, that last 25% could still happily sit in your bank account for something you really want. Wait for when you have the time and space to make your mind up.

When you’re itching to buy something in short supply, think of a few things you would lose if you purchased it. It might be money, time, or space — whatever it is, list it out on a piece of paper in front of you. Then weigh up your purchase.

A deeper dive — Related reading on the 101:

These tips will help prevent you from spending too much on Black Friday.

Black Friday isn’t the only time you can make financial mistakes around the holidays — beware of these other common errors.