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Why people want to Buy Satyam Computers | Case Study Behaviour Psychology

Posted By On 1/18/2009 01:52:00 PM Under

1. People are asking the question time and again that whether one should buy Satyam Computers post Satyam Scam or Satyam fraud as may be appropriately stated. People are willing to buy at present value and same is attributed to behaviour psychology which suggests that people rely more on relative values than on absolute price.

2. It has been seen that people will drive three miles to redeem a discount coupon that will shave off Rs 5 on a toothpaste that costs Rs 50 (10 per cent discount). Yet, people will be reluctant to travel the same distance to save Rs 1,000 on a television set that costs Rs 50,000 (2 per cent discount).

3. Similarily people are willing to buy Satyam at such low levels as they feel that it has become a value buy as it has drastically fallen from its peak of Rs 500 plus to a level of Rs 20. Thus no other explanantion can explain this behaviour as they are willing to bet on a company which is having a number of frauds and still its balance sheet is not clear. Only real explanantion which comes to the mind is ‘relative-value effect’ which makes people believe that Satyam is a value-buy after its sharp decline.

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