From loo rolls to the petrol pumps... the behavioural economics of panic buying
It is rational to prepare for something bad that looks like it’s likely to occur however it’s not rational to fill plastic bags full of petrol for what is simply a delay in fuel delivery. The rapid adoption of fuel stockpiling signals that customers are still fearful of the future believing that any event warrants a dramatic response.
Behavioural economics explains our response:
Fear of the unknown - panic buying is a psychological mechanism to deal with our fear and uncertainty; a way to assert some control over a situation by taking an action.
Loss aversion - we don’t want to miss out. If we didn’t get it when we had the chance, we know we will feel really bad
Herd mentality - panic buying and the associated media coverage breeds panic buying.
If everyone else on the Titanic is running for the lifeboats, you’re going to run too, regardless if the ship’s sinking or not – Steven Taylor, a professor and clinical psychologist at the University of British Columbia, and the author of The Psychology of Pandemics
The good news?
Times of crises offer opportunities for businesses to emotionally connect with customers. Clear communication, respectful customer service and genuine empathy are more important than ever to give customers the sense of control and trust they desire.