TODAY   |  November 24, 2012

Shopping smart this holiday season

“Be very mindful of what’s going on,” said Carmen Wong Ulrich from Good Housekeeping to TODAY’s Carl Quintanilla. Ulrich offered tips on how to spot the secret strategies of retailers, and said to be wary of the free gift and flash sales.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> this morning in today's consumer, how to avoid overspending. the holiday shopping season is in full swing and your favorite stores have a few tricks up their sleeve to get you to shell out some big bucks . carmen is here to reveal what they are. good morning to you.

>> good morning, carl.

>> why should people be more worried about having the retailers sort of figure out this whole game of how to get us to spend more?

>> they are fighting for your money, right? because we're the most savviest consumers ever. we've got shopping apps on our phone, promo codes, shopping sites. we know how to shop and we're much more likely to have a budget. since the recession, we cut down on credit card debt , and we'll spend a little bit more, but we want to stick to our budget.

>> you've laid out a few of the strategies that they use. the first one is called the decoy effect .

>> here we go. here's the decoy. let's say you have two choices of the same item. different in quality, but it's $50 for that coffee maker versus $100. if only those two choices existed and you're on a budget, you'll choose the $50 coffee maker . the decoy is brought in in the middle to get you to spend more, because once that decoy is there, you're more like tlly to buy the one in the middle. the middle range in price and quality, because it goes from just a savings decision the a value and quality decision. oh wow, $70. for an extra $20, i can get closer to that $100. that's what happens in your mind, even if it blows your budget. just be mindful of that.

>> this works because we think we're getting a deal?

>> exactly. our perception has topped. if you have a bottom and a top, that's your only choice. the decoy makes it seem like oh, i got a deal.

>> i like this next one. it's the scarcity effect.

>> okay, what is black friday? why do people line up and all that? because when you have a limited timeframe and a limited amount of items, we go nuts. this is black friday. this is also, though, the flash sales on site. i call this the guilt effect for, which really started these flash sales. it's new. we've got to go in. it's a limited quantity. we've got to buy. this goes back to 1975 , behavioral economists found that women with two sets of cookies -- they called this the cookie effect. simply because one set of cookies, there was a smaller amount. women rated them higher. the cookie effect is the scarcity effect. going back to hunting and gathering .

>> this last one, the reciprocity effect.

>> freebies. women at the makeup counter. you get free. if you spend $50, you get free. now online, too, if you buy from online retailers , they'll send you free samples . here's the thing. 90% of us say if we get a freebie, we'll be very likely to buy from that person again. it's the "you owe me one" effect.

>> the best defense against all of these are what?

>> to know that they exist and to know how they work, and just be very mindful of what's going on. that time pressure, ban yourself from those sites if you have a problem with it, and with the freebie effect, just because someone gives you something doesn't mean you owe them anything.

>> that masters in psychologist is