They call him Soapy

Soapy, one of the most infamous gangsters of the 1860’s. His infamous Prize Soap package swindle took countless states by surprise and earned him the name Soapy Smith. The techniques he used to persuade people into buying his soap bars were brilliant and people still fall for them today. This is his story….

Soapy had a soap stall. He wrapped each bar of soap with plain paper. Once in a while he would wrap a bar of soap with some money (notes ranging from $1 - $100), then he would cover the money with some more plain paper. The result was a pile of soap bars, some with money and some without. Soapy then proceeded to sell the bars auction-style, starting price at $1.

If this scenario seems familiar it’s because the exact same principles operate in lotteries or lucky-draws. So what exactly lures people into buying a few seconds of irrational hope? Well it a combination of clever landscaping on the part of Soapy, and the victim’s natural cognitive biases. By drawing a crowd Sopay was able to create a ‘band wagon effect’ where everyone wants to be part of the action (Nadeau, Cloutier & Guay, 1993). ‘Emotional contagion’ also plays a part as bidding begins and everyone gets excited (Hatfield & Cacioppo, 1994). But perhaps the most influential motivator is the belief that just because somebody else won, they too have an equal chance of winning. This is known as the Base rate Fallacy (Baron & Jonathan, 1994), where one tends to ignore base rate information (the actual likelihood of winning) and focus on specific information (the number of winners, but not the number of losers).

Of course once in a while someone had to win a bar of soap otherwise people would suspect something was up. Unknown to his victims, the ‘soapy gang’ were in amongst the crowd of buyers. Only members of the gang were fortunate enough to pick out bars of soap containing cash and once they found the money inside, gang members would celebrate loudly letting passers-by know exactly how they beat Soapy at his own game. This “friendly advice” actually is yet another attempt at getting people to participate. The accomplice makes it seem as though he and the victim are on the same side - both trying to catch Soapy out. As the con progresses two additional techniques are employed. As more soap bars are sold the competition for the remaining bars increases. This introduces the scarcity principle, where people want what is fast becoming unavailable (Lynn, 1991). Finally the perception of a time limit, created by the auction-style of selling makes people more impulsive and willing to participate (Klein, 1998).

Numerous casinos and lottery games worldwide employ these simple yet effective techniques. So the next time you want to try your hand at a gamble, think twice because the odds of you winning really are as slippery as soap!  

References:

Baron, J. (2000). Thinking and deciding. Cambridge University Press.

Brickman, P., Coates, D., & Janoff-Bulman, R. (1978). Lottery winners and accident victims: Is happiness relative?. Journal of personality and social psychology, 36(8), 917.

Griffiths, M., & Wood, R. (2001). The psychology of lottery gambling.International gambling studies, 1(1), 27-45.

Hatfield, E., & Cacioppo, J. T. (1994). Emotional contagion. Cambridge university press.

Klein, G. A. (1998). Sources of power: How people make decisions. MIT press.

Lynn, M. (1991). Scarcity effects on value: A quantitative review of the commodity theory literature. Psychology & Marketing, 8(1), 43-57.

Nadeau, R., Cloutier, E., & Guay, J. H. (1993). New evidence about the existence of a bandwagon effect in the opinion formation process. International Political Science Review, 14(2), 203-213.

Rogers, P. (1998). The cognitive psychology of lottery gambling: A theoretical review. Journal of Gambling Studies, 14(2), 111-134.

Wood, R. T., & Griffiths, M. D. (1998). The acquisition, development and maintenance of lottery and scratchcard gambling in adolescence. Journal of Adolescence, 21(3), 265-273.

Learn more about soapy and the many cons he created:

http://www.soapysmith.net/id16.html