When an object or resource is less readily available (e.g, due to limited quantity or time), we tend to perceive it as more valuable (Cialdini, 2008). Scarcity appeals are often used in marketing to induce purchases. Marketing messages with limited quantity appeals are thought to be more effective than limited time appeals, because they create a sense of competition among consumers (Aggarwal et al., 2011). An experiment (Lee & Seidle, 2012) that used wristwatch advertisements as stimuli exposed participants to one of two different product descriptions “Exclusive limited edition. Hurry, limited stocks” or “New edition. Many items in stock”. They then had to indicate how much they would be willing to pay for the product. The average consumer was willing to pay an additional 50% if the watch was advertised as scarce.
Scarcity can be used as an effective strategy by choice architects to get people who put off decisions (myopic procrastinators) to act (Johnson et al., 2012).
Source: Behavioral Economics