User:Colecooper28

Scarcity is the principle where the more rare something is the more valuable it is, and is a part of social psychology

People are attracted to the unavailable or unattainable. Advertisers attempt to arouse the slumbering consumer with messages announcing "limited time offers." Limited editions of nearly every commodity including automobiles, books, lithographs, and even breakfast cereals tantalize the public. And it is the rare parent who has not advised a son or daughter that one route to popularity is to "play hard to get."

Economists were among the first social scientists to study the influence of scarcity. The focus of economic theory was on the relationship between supply, price, and quality. The research suggested that in the absence of information about a product, there is a positive relationship between price and quality(or perceptions of quality) and a negative and causative relationship between supply and price or qusility. In other words, scarcity increases the value of an object and its perceived quality. Economic theories, however, offer little insight into the psychological processes that underlie the relationship between supply and value (demand). They imply that people develop a schema relating price, supply, and quality through experience.

According to psychological research, scarcity increases an object's desirability. Although inconsistent with the assumptions of formal economic theory, this effect of scarcity may be attributable to people's naive (or informal) economic theories. More specifically, scarcity's enhancement of desirability may be mediated by the belief that scarce things are more expensive than available ones.

The scarcity principle holds for two reasons. First, because things that are difficult to attain are typically more valuable, the availability of an item or experience can serve as a shortcut cue to its quality. Second, as things become less accessible, we lose freedoms. According to psychological reactance theory, we respond to the loss of freedoms by wanting to have them (along with the goods and services connected to them) more than before. The scarcity principle is most likely to hold true under two optimizing conditions. First,scarce items are heightened in value when they are newly scarce. That is, we value those things that have become recently restricted more than those that were restricted all along. Second, we are most attracted to scarce resources when we compete with others for them.