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Priceless: The Myth Of Fair Value

by William Poundstone
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Product Details

  • Publisher: Hill and Wang
  • Publishing date: 05/01/2010
  • Language: English
  • ISBN-13: 9780809094691
  • ISBN: 080909469X

Synopsis

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 hasn’t 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.
William Poundstone is the author of two previous Hill and Wang books: Fortune’s Formula and Gaming the Vote.
In Priceless, author William Poundstone reveals the hidden psychology of value, divulging that prices are simply a collective hallucination. In psychological experiments, people are unable to estimate ?fair” prices accurately and are strongly influenced by the unconscious, irrational, and politically incorrect. It hasn’t 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. For example, Prada and other luxury stores stock a few obscenely expensive items?just to make the rest of their inventory seem like a bargain. 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.

?Priceless is an instructive and entertaining romp through the hits of recent research on decision making, which will leave you amused, smarter, and wondering about what money and prices really mean.”?Daniel Kahneman, professor emeritus, Princeton University, and winner of the 2002 Nobel Prize in Economics

?A powerful argument that should be a wake-up call to everyone who still subscribes to the old model of economics.”?Dan Ariely, author of Predictably Irrational: The Hidden Forces that Shape Our Decisions

?Poundstone has managed to write a book that is fun to read and yet well-researched and substantive. Without a minute of suffering the reader gets to know nearly all the key contributors to the science of decision making. Recommended for anyone who has to make decisions.”?Richard H. Thaler, coauthor (with Cass R. Sunstein) of Nudge: Improving Decisions on Health, Wealth and Happiness

?The psychology of prices is, to an extent, the psychology of life, and thus the lessons of Priceless are indeed life lessons. Poundstone's lively descriptions of the irrational quirks that characterize our behavior are engaging and enlightening. Take it with you when you're thinking of buying (or selling) something. It might save you a bundle.”?John Allen Paulos, author of Innumeracy: Mathematical Illiteracy and Its Consequences and Irreligion: A Mathematician Explains Why the Arguments for God Just Don't Add Up

?If you can get this book for under $100, grab it!  After you read it, you will better understand why the price you paid felt like a bargain.”?Max Bazerman, professor of business administration at Harvard Business School, and coauthor of Judgment in Managerial Decision Making

?Much of behavioral economics . . . has focused on the seemingly crazy ways in which people and prices interact. In his new book Priceless, William Poundstone offers a thoroughly accessible and enjoyable tour of this research . . . Poundstone is an engaging intellectual historian who traces the development of behavioral economics from its roots in the 1960s discipline called psychophysics, an offshoot of psychology . . . It was more than century ago that Oscar Wilde famously observed that ?people know the price of everything and the value of nothing.’ In Priceless, we now have the proof.”?Steven Pearlstine, Washington Post

?Pricing is a richer subject than you might imagine. The smile that creeps onto your face when a shameless marketing gambit reminds you of something you read in Poundstone's book? Priceless.”?Peter Coy, Business Week

?[Poundstone] makes complicated economic and psychological concepts palatable by using a numble, colloquial style in refreshingly short chapters . . . Dozens of fascinating topics are explored . . . At the end you will be left wondering what money and prices really mean?the dizzying quirky irrational sort of wonder that Alice found in ?Wonderland.’”?Roger Miller, The Denver Post

?Bright analysis of the psychology of pricing . . . readable and revealing.”?Kirkus Reviews

?Poundstone, author and columnist, reviews innovative work in psychology called behavioral decision theory, or the study of how people make decisions. We learn how people estimate numbers, the process of making wild guesses, jotting down offers and counteroffers, and rating anything on a scale of 1 to 10. Extensive research on pricing strategies has been conducted, and marketers have learned what people will pay is changeable and consumers can be manipulated. The book cites numerous experiments, including how juries award damages in court; reserve price research, or the maximum a buyer will pay; the way smart people are influenced by mere words and by the way choices are framed; sale prices are more powerful motivators than charm prices (those slightly below a round number); and money and chocolate are the most popular motivators in behavioral decision experiments. This collection of experiments and related findings is essentially an academic work for a variety of students.”?Mary Whaley, Booklist

?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


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  • Did I pay a fair price for this book?
    From Amazon

    Yes,but I did get this from the library. This book confirmed my unease that I, and apparently most other people, really cannot clearly establish what anything should cost. It is bad enough at the supermarket (are organic or free trade items really worth that much more?) but even worse with larger items bought less frequently (airline flights, appliances). And for once in a lifetime events - a jury deliberating on a major civil lawsuit, forget it. The author pulls out many fascinating nuggets behind the art and science of assigning pricing, and how psychology, and those who understand and harness it, can mislead the consumer. My only fault with this book is that it consists of 50-60 somewhat unconnected chapters. Condensation and editing of the material would raise its price.

  • Plenty of pricing 'psychophysical' concepts to consider
    From Amazon

    The standout feature of Priceless is the number of pithy chapters that communicate complex research and the many variations of the 'psychophysics' of pricing. Some are obvious. You might pat yourself on the back for having intuited the 'right price' to discover that there is a `scientific' basis for your intuition. Typical large and small consumer examples are plentiful and the complex science behind pricing them is well presented. It was my hope that perhaps more complex pricing science might be revealed for improving my pricing decisions within more complex, technical and B2B environments. Oh well, I'll just have to keep on intuiting and keep hoping the customer buys it. 5 stars as a quick biz read. Superbly transcon airplane flight readable. Priceless is very current in its examples (Zillow pricing implictions are explored). If you see it before a long flight ... buy it. Only 4 stars overall for its intercept with my pre-purchase expectations of its utility to my purpose.

  • Googled together?
    From Amazon

    From "The recursive Universe" (1984) till "Fortune's Formula" (2005), I am a longtime mostly happy reader of Poundstone. This time, I'm not. The present book is a loose collection of newspaper like items, 57 in total and grouped into four parts. Nowhere in the book I found an explanation what the parts stand for. Nor is there any introduction explaining the structure of the book or its goals. Neither is there any conclusion at the end. Googling the internet on Kahneman, Tversky and Thaler would probably catch 80 percent of the contents, if not more. But Poundstone did that for me. Is it worth its price? According to Max Bazerman, Professor of Business Administration, Harvard Business School on the backflap: "If you can get this book for under $100, grab it! After you read it, you will better understand why the price you paid felt like a bargain". I got the book for $17.81 (march 2010). Given the set anchor and the priceless project theory, I should feel happy. But I don't. Which could explain why its current (may 2010) price is under $15.

  • Well wrtitten, entertaining, and informative
    From Amazon

    I found the book to be well written, entertaining enough that i finished its 336pp in three evenings of enjoyable reading. I read some of the other less than stellar reviews and would wholeheartedly disagree with those critics on the value of this book. It simply proposes to tell one of how marketers use various gimmicks to control prices, and some of these are in subliminal manners. I was never under the guise that this book was meant to be considered a course in price theory, which would be a junior level course in a pursuit of a bachelors degree with a major in economics, but some readers might have thought that reading this one book would prepare them to challenge Greenspan or Summers on economic theory. We all have our biases and prejudices in all areas of life, and PRICELESS helps to explain how and why we may feel in a certain way about the price of Gucci bag, a pair of Jimmy Choos, and etc. The evidence provided is primarily anecdotal and not meant to be an all encompassing erudite study in economics. If you want to read a very entertaining book on how many large marketers decide to set what they consider to be their optimal prices for their various products then add this book to your reading list. If you want to become an economic expert, I would suggest enrolling in an institution of higher learning and expecting to take four years of concentrated study in that area before you even think of grad school. I liked this book enough that I bought additional copies for each of my kids, so that should say how much I liked it.

  • Very interesting
    From Amazon

    I saw this book in the bookshop and bought it because not too long ago I read a book called "Predictably Irrational" by Dan Ariely which was very good and interesting and this book seemed to be about the same sort of thing. It is about what sort of things influence the price people are willing to pay for goods and services etc, and how the human mind sometimes subconsciously tricks us into being influenced by factors we are not aware of. The book has details of a lot of experiments to illustrate it's points throughout. Really it is very interesting and easy to read. I read it in the space of a day. The main thing that I didn't like about the book was that it was very similar to Dan Ariely's book. It uses many of the same examples as has much of the same subject matter. I guess it is not surprising that the subject matter and examples were similar because the books are about the same subject. I guess if i were to buy a book about introductory physics, for example, and then purchased another one, then the content would be similar and might use the same examples. So I guess all i am saying is that it's a really good book but if you already have Dan Ariely's book then this one may not add too much to what you have already read!!

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