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Priceless: The Myth of Fair Value (and How to Take Advantage of It)
Synopses & Reviews
Prada stores carry a few obscenely expensive items in order to boost sales for everything else (which look like bargains in comparison). People used to download music for free, then Steve Jobs convinced them to pay. How? By charging 99 cents. That price has a hypnotic effect: the profit margin of the 99 Cents Only store is twice that of Wal-Mart. Why do text messages cost money, while e-mails are free? Why do jars of peanut butter keep getting smaller in order to keep the price the “same”? The answer is simple: prices are a collective hallucination.
In Priceless, the bestselling author William Poundstone reveals the hidden psychology of value. In psychological experiments, people are unable to estimate “fair” prices accurately and are strongly influenced by the unconscious, irrational, and politically incorrect. It hasnt taken long for marketers to apply these findings. “Price consultants” advise retailers on how to convince consumers to pay more for less, and negotiation coaches offer similar advice for businesspeople cutting deals. The new psychology of price dictates the design of price tags, menus, rebates, “sale” ads, cell phone plans, supermarket aisles, real estate offers, wage packages, tort demands, and corporate buyouts. Prices are the most pervasive hidden persuaders of all. Rooted in the emerging field of behavioral decision theory, Priceless should prove indispensable to anyone who negotiates.
"Poundstone (Gaming the Vote) dives into the latest psychological findings to investigate how and why prices are allocated. Beginning with the controversial lawsuit in which a jury awarded $2.9 million in damages to a woman who had spilled a scalding cup of McDonald's coffee on herself, the author presents a readable history of how we are subtly manipulated into paying more (or less) for goods and services — and the research that attempts to explain our baffling and irrational susceptibility to pricing. The idea of 'anchoring and adjustment' — setting an arbitrary number to subconsciously drive higher or lower estimates — is just one of many research areas explained at length. While Poundstone's case studies are vivid, the abundance of theories and experiments might prove overwhelming for the casual reader. Nevertheless, the scope of the analysis — its attention to economic abstractions as well as real-world consequences — braids together theory and practice to leave an indelible impression on the reader. Grocery shopping will never seem so simple again when one realizes how much work goes into assigning a price to a box of cereal." Publishers Weekly (Copyright Reed Business Information, Inc.)
The new psychology of price dictates rebates, ads, cell phone plans, wage packages, and corporate buyouts--along with countless other areas. Rooted in the emerging field of behavioral decision theory, "Priceless" should prove indispensable to anyone who negotiates.
About the Author
William Poundstone is the author of two previous Hill and Wang books: Fortunes Formula and Gaming the Vote.
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