Priceless The Myth of Fair Value (and How to Take Advantage of It)

William Poundstone

Hill and Wang

0809078813

9780809078813

Trade Paperback

352 Pages

$14.99

CAD16.99

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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.

REVIEWS

Praise for Priceless

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

“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, The Washington Post Book World

“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, Bloomberg 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

"An entertaining look at how companies, restaurants and even artists exploit psychology to extract more cash from the rest of us."—James Pressley, Bloomberg.com

“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

“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

Reviews from Goodreads

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BOOK EXCERPTS

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One

The $2.9 Million Cup of Coffee

In 1994 an Albuquerque jury awarded Stella Liebeck $2.9 million in damages after she spilled a piping-hot cup of McDonald’s coffee on herself. This resulted in third-degree burns and precious little sympathy from the American public. Late-night comics and drive-time DJs turned Liebeck into a punch line. Talk radio pundits saw the lawsuit as Exhibit A to What’s Wrong with Our Legal System. A Seinfeld episode had Kramer suing over spilled coffee, and a website inaugurated the "Stella Awards"—booby prizes for the wackiest perversions

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  • Flipping on eBay - William Poundstone

    William Poundstone explains the psychological trick of anchoring and how it works on eBay.

  • The Magic Number - William Poundstone

    William Poundstone discusses charm prices and the mysterious allure of 99 cents.

  • Menu Psych - William Poundstone

    William Poundstone explains the hidden psychology of restaurant menus.

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ABOUT THE AUTHOR

  • William Poundstone

  • William Poundstone is the author of two previous Hill and Wang books: Fortune’s Formula and Gaming the Vote.
  • William Poundstone Russel Taylor
    William Poundstone
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