‘Some companies base their business models on our tendency to overestimate our willpower’

So, how are those resolutions going? Given that the new year has scarcely begun, there is some chance that your will remains as firm as it was on New Year’s Eve: the cigarettes have not been smoked, the white wine has not been guzzled and you actually went to the gym. As we all know, however, a year is a long time to stay strong.

Companies know it too, and some base their entire business model on our tendency to overestimate our willpower, our memory or our ability to navigate small print so devious that it would make Rumpelstiltskin blush.

The most egregious example — popular in the US, blessedly less so in the UK — is the mail-in rebate, where a manufacturer or retailer will offer a discount but only after the customer fills in a form, attaches a receipt and mails the paperwork off with fingers crossed. There are a number of advantages to this — it may allow the manufacturer to gain information about customers, and produces a flattering cash flow — but surely the main reason companies use mail-in rebates is that they know some people aren’t as disciplined and organised as they think.

Scott Adams, as so often, nailed the issue in a Dilbert comic strip. Dogbert offers a product for sale for $1,000,029 with a $1,000,000 rebate. And since “all we need is one person to forget to mail in the rebate forms”, Dogbert suggests targeting “the lazy rich”.

While the mail-in rebate is a particularly naked case of exploiting inattentive consumers, there are subtler examples, such as magazine subscriptions with free trial periods followed by auto-renewals.

More subtle still are pricing schemes that exploit consumers. In a recent analysis of overconfident consumers, economist Michael D Grubb highlights the “three-part tariff”. A one-part tariff would be, for example, 2p per minute to make phone calls. A two-part tariff might be £10 a month, plus 1p a minute to make phone calls. And a three-part tariff? A tenner a month with 200 minutes of free calls, plus 10p a minute to make phone calls after the 200 minutes have been used.

The three-part tariff will be reassuringly familiar to anyone with a mobile phone contract. But look at it there on the page. It’s ridiculous, is it not? It is hard to imagine any company deploying such a convoluted offering for a product whose consumption was obvious, such as petrol — “£10 a month to use our petrol stations, the first 50 litres of petrol to be supplied at cost price, and then £5 a litre thereafter.” There are legitimate business justifications for a three-part tariff but the likeliest story is that phone companies think we are fallible. Most of us don’t have a firm grasp either of how much we talk on average or of how variable that average is. As a result, many of us pay these punitive charges more often than we expect.

At least mobile phone carriers offer an honest service behind their manipulative pricing structures. I am not sure the same can be said of bookmakers, casinos and lotteries. Some of their customers have a clear-headed view of their chances of winning — just as some customers mail back their rebates or accurately forecast their phone calls — but many must overestimate their skill or underestimate the odds against them.

Yet I wonder if any business model is more dependent on the excessive optimism of its customers than gyms that offer ongoing memberships. In a famous research paper, “Paying Not to Go to the Gym”, economists Stefano DellaVigna and Ulrike Malmendier studied almost 8,000 gym members, with data on their attendance record and on the contracts they had agreed with the gym.

There were three contractual options: pay per visit, pay monthly on an automatically renewed contract, or pay annually on a contract that is not automatically renewed. DellaVigna and Malmendier found a number of patterns that are most naturally explained by the hypothesis that we consumers are naive, weak-willed fools.

● Eighty per cent of pay-monthly customers would have paid less — often much less — had they simply paid per visit. Likely explanation: we don’t go to the gym as much as we think we will.

● Pay-monthly customers pay more than the annual customers, because they retain an option to cancel, yet these customers, in fact, tend to stay members for longer. Explanation: we think flexibility is valuable but don’t realise how lazy we are in the face of auto-renewal.

● The people who get the worst value from the gym (highest per-visit cost) also take the longest to cancel (gap between final visit and cancellation). Explanation: people who are idiots about one thing are idiots about other things too.

Taking money to provide facilities to people who do not use them is a tempting business. But gym companies must still compete with each other for our custom, even if that competitive dynamic is dysfunctional.

So, take heart: if you are a customer who mails in her rebates, who carefully rations mobile phone use or who goes to the gym five times a week, then you are likely to get an excellent deal, cross-subsidised by other customers.

And you are just such a person, aren’t you? Of course you are.

Written for and first published at ft.com