People tend to reject free stuff as they are afraid it comes with hidden costs, reveals new study

You might have heard the phrase "If it is too good to be true, it probably is." It simply means that if something sounds unbelievable or way too generous, there is reason to get suspicious. And according to a recent study, people solely believe in this phrase and tend to reject free stuff as they think that it comes with some sort of strings attached.

A recent study conducted by The Conversation says that people tend to reject freebies as they are afraid that there might be hidden costs involved.

As part of the study, free cookies were offered to the participants and they were then offered money to eat them. It was found out that twice as many people were willing to eat a cookie for free compared to when money was added to the deal. What’s going on here?

From a purely economic standpoint, it seems irrational—who wouldn’t want the cookie and cash? But humans aren’t robots following logical algorithms. We’re social beings, and when an offer seems too good, we instinctively search for hidden strings attached. This tendency to suspect a “phantom cost” influences how we respond to generous offers, even when nothing is outwardly wrong.

About the study

In the study conducted by The Conversation, participants who were paid to eat the cookie grew suspicious. They might be wondering if it was poisoned or someone spat in it. Or perhaps accepting it would mean owing a favour down the road. The offer felt too generous, making people hesitant to take the deal.

This phenomenon wasn’t limited to free cookies. The Conversation conducted ten experiments with over 4,000 participants in the U.S. and Iran, examining how “phantom costs” shape decision-making. The results were clear—when a deal is too good, people suspect something’s wrong.

Too good to be true?

In one experiment, participants were asked to imagine they were truck drivers searching for a job. All job descriptions were identical, but the wages varied. Those offered the standard $15 per hour were happy to accept. When the wage was bumped to $20 or $25, people assumed the job would be tougher but still worth taking.

But when the wage skyrocketed to $900 per hour, people backed away. Why? Their imaginations ran wild—suddenly the job seemed dangerous, maybe involving criminal activities like smuggling drugs or handling radioactive waste. A higher wage, instead of being appealing, triggered fears of hidden risks.

The researchers repeated this experiment in both the U.S. and Iran, two countries with very different economic landscapes. But the results were strikingly similar: participants in both nations rejected excessively high wages, imagining all sorts of dangerous “phantom costs.” The only real difference? Wages didn’t have to be quite as high in Iran for people to become suspicious, given the lower baseline expectations.