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Priceless: The Myth of Fair Value (and How to Take Advantage of It) Hardcover – Bargain Price, January 5, 2010

4.2 out of 5 stars 79 customer reviews

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Hardcover, Bargain Price, January 5, 2010
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Editorial Reviews

From Publishers Weekly

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. (Jan.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From Booklist

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
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Product Details

  • Hardcover: 352 pages
  • Publisher: Hill and Wang; First Edition edition (January 5, 2010)
  • Language: English
  • ISBN-10: 080909469X
  • ASIN: B004HB1D6S
  • Product Dimensions: 6.6 x 1.2 x 9.3 inches
  • Shipping Weight: 1.3 pounds
  • Average Customer Review: 4.2 out of 5 stars  See all reviews (79 customer reviews)
  • Amazon Best Sellers Rank: #1,478,242 in Books (See Top 100 in Books)

Customer Reviews

Top Customer Reviews

By Oliver Fritsch on January 10, 2010
Format: Hardcover Verified Purchase
I ordered this book after a good review in the Wall Street Journal.

From the title it sounds like a fairly dry book on pricing theories for a professional marketing audience.
In reality it is a very entertaining, well researched book about how prices are set from all kinds of businesses, how consumers react to them - and why.

Having worked in marketing and as an entrepreneur for 20 years, I have come across some of the stories quoted in the book already. However, I was not aware, that a German professor (Hermann Simon) runs the biggest pricing consulting firm in the world, that restaurant menus are better designed without leading dots before the price (otherwise they guide the eye to the lowest priced item) or that supermarkets yield a $2 higher average shopping cart revenue if the path through the market goes counterclockwise instead of clockwise.

It will take some work to extract pricing lessons for your own business (you actually have to READ the book first!) but it is pleasant enough!

Oliver Fritsch
Cendesic Marketing
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Format: Hardcover Verified Purchase
I bought this book after hearing the author interviewed on NPR. In the brief two-minute (or thereabouts) interview the author mentioned some factoids that sounded fascinating and whetted my appetite for more.

Now having read the book, I have to say that, although I learned things about the human mind I never knew before, I was disappointed in how dry the book was overall. The first half was devoted to the history of psychophysics, and numerous experiments conducted over the last hundred or so years. These experiments have served to establish just how quirky, irrational and suggestible the human mind is with regards to numbers, and pretty much debunk the established notion among economists that humans behave rationally when it comes to numbers, always making decisions that will best benefit themselves (the mythical Homo Economicus). Although these experiments were all new and surprising to me, reading about them felt like reading a college textbook. Not exactly my idea of pleasure reading!!

Just about exactly halfway through the book, Poundstone gets more interesting. This is when he starts citing real-world examples of how savvy businesses take advantage of the mind's susceptibility to numbers (often using the service of "price consultants"), all with the intent of getting clueless customers to part with more of their hard-earned money. This part of the book was truly fascinating, as he talked about how super-pricey designer boutiques arrange merchandise in their stores, how restaurants design their menus, and how new and unknown artists price their work to gain attention.

Alas, this part of the book was all too short, as Poundstone soon lapsed again into talking about more experiments.
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Format: Hardcover Verified Purchase
There is an intriguing irony (if not synchronicity) to my purchase of this book.

The story is, I had been trying to buy this book for a few weeks from Amazon.

But I couldn't (without incurring shipping fees), because Amazon had delisted the hardcover book from their catalog. Why would Amazon refuse to sell a new book by a prominent author? Well, ostensibly it was "retaliation" for the book publisher's (Macmillan's) request that Amazon charge higher prices for Kindle books published by Macmillan. Leaving aside the question of why users without a Kindle should have their ordinary book access restricted because of a pricing dispute over a product they do not want, the imbroglio raises two salient issues about pricing:

(1) Why is $9.99 (what Amazon wanted to charge) the "right" price for a Kindle e-book? Why not $12.00 or $14.00 (which Macmillan wanted to charge)? If you read some of the Kindle users' blogs, they are adamant that $9.99 is the right price, and that $14.00 is too high - but how do they know?

(2) Why would Macmillan care if Amazon charges too little for Kindle pricing anyway? It doesn't directly affect their profits (Amazon makes up the difference).

Well, as it turns out, the underlying framework behind both of these questions is carefully discussed and elucidated in this very book!

As to issue (1), Poundstone argues that much of what we think of as "fair" pricing is nothing more than a collection of cognitive fallacies and biases. The most important of these fallacies are the contrast effect (pricing taking on significance from neighboring prices) and the anchoring effect (we are drawn to a particular number).
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Format: Paperback Verified Purchase
I've read all this before in Daniel Kahneman's book Thinking: Fast and Slow.

Priceless becomes ponderous after the first 100 pages.

Not sure if I'll make it through this one.

Tim
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Format: Hardcover Verified Purchase
There is so much to think about in this book. If I had to synopsize it in one sentence, it would be something like "Why optical illusions can be analogized to reasoning errors and how that creates a reason for State action to force people to be rational."

First, the dynamics.

1. The book is 281 pages of text and a total of 57 chapters. That works out to about 4.9 pages per chapter, just enough to read a couple over a lunch break or some other short space of time.
2. The sources are over 18 pages, and there are A LOT of multiple citations for sources per chapter. I don't know if they really had that much data. And come to all that, a lot of the data was repeated by at least two other books (mentioned below).
3. It would help if the chapters of the book were at least subtitled to give an idea of what they were talking about. And that the different sections of the book had at least a one- or two-paragraph introduction.

There is a balance between chapters that are so long that they read like an Ayn Rand book and chapters that are so short that they convey almost no usable information. This book falls on to the latter side of that distribution.

Second, the things that they take issue with:

1. I know that they are attacking the concept of utility, as used by economists, but we already knew that economists can't predict anything anyway, and that has been detailed exhaustively by Nassim Nicholas Taleb in his many books. They keep hammering on these issues of arbitrary coherence and utility and the "rational consumer," but there are many, many other reasons why Economics does not work anyway (causal density is too high, according to Jim Manzi in Uncontrolled).
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