Optimal Conditions for the Scarcity Principle

The scarcity principle is most effective under two conditions:

New Scarcity

We are more likely to be influenced by scarcity when it is new. For example, we are more likely to want something that has just become scarce than something that has always been scarce. This is because we are more sensitive to losses than to gains.

Competition for Scarce Resources

We are more likely to be influenced by scarcity when we are in competition with others for a scarce resource. This is because competition creates a sense of urgency and makes us more likely to act. For example, we are more likely to want something if we see other people trying to get it. This is why auctions are so effective.