Final answer:
People are more likely to choose to drive 30 minutes to save $20 on a $100 vacuum cleaner than to save $20 on a $10,000 car due to factors such as psychological utility, non-transitive decision-making, certainty effect, and perception of expected utility.
Step-by-step explanation:
Behavioral economists have noted that people tend to evaluate outcomes relative to a reference point and think of gains and losses as percentages rather than actual savings. In this case, the cost of the product serves as the reference point. Therefore, people are more likely to choose to drive 30 minutes to save $20 on a $100 vacuum cleaner than to save $20 on a $10,000 car. The decision to opt for the vacuum cleaner can be attributed to psychological utility and non-transitive decision-making. Psychological utility suggests that people place more value on the immediate savings provided by the cheaper vacuum cleaner, as it represents a higher percentage of the product's cost. Non-transitive decision-making refers to the fact that people don't always make consistent decisions when faced with different situations or options.
In contrast, the decision to not opt for the cheaper car can be explained by the certainty effect and the perception of expected utility. The certainty effect suggests that people tend to favor guaranteed outcomes, and the uncertainty and risk associated with driving 30 minutes for a $20 discount on a significantly more expensive car might outweigh the potential savings. Additionally, people may perceive the expected utility of the car purchase to be greater than that of the vacuum cleaner purchase, which could influence their decision-making process.