- Hardcover: 336 pages
- Publisher: Hill & Wang (5 Jan 2010)
- Language English
- ISBN-10: 080909469X
- ISBN-13: 978-0809094691
- Product Dimensions: 23.5 x 16.1 x 3.2 cm
- Average Customer Review: 4.6 out of 5 stars See all reviews (5 customer reviews)
- Amazon Bestsellers Rank: 339,477 in Books (See Top 100 in Books)
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More About the Author
Product Description
Product Description
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.
About the Author
William Poundstone is the author of two previous Hill and Wang books: Fortune’s Formula and Gaming the Vote.
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Customer Reviews
Most Helpful Customer Reviews
9 of 9 people found the following review helpful
Format:Hardcover
As someone who works in pricing, a book on what constitutes 'fair' value got my immediate attention. The main message is that there is no such thing in absolute terms. What is considered fair will depend on the context, and this context can be manipulated to increase the perception of fairness. While the book does contain some ideas you could implement, it is not a pricing handbook.
The book gives an overview of the field of behavioural economics in so far as it relates to pricing/valuation. If you've read a bit on the work of Kahneman, Tversky, Ariely, Thaler, ... you'll already be familiar with most of its contents. The book's merit lies in the selection it makes within this broad area of knowledge and the author's own observations.
It is set up as a series of short chapters that deal with a specific concept (priming, anchoring, ...), a specific application (99 cent pricing, Free!, ...) or an exploration of influencing factors (intelligence, race, gender, ...).
It's written in an entertaining anecdotal style that doesn't require any previous knowledge on the part of the reader. Anyone interested in understanding how humans can be influenced to find certain prices more attractive will benefit from reading this book. Once you've read this book you'll never look at a restaurant menu in the same way again.
The book gives an overview of the field of behavioural economics in so far as it relates to pricing/valuation. If you've read a bit on the work of Kahneman, Tversky, Ariely, Thaler, ... you'll already be familiar with most of its contents. The book's merit lies in the selection it makes within this broad area of knowledge and the author's own observations.
It is set up as a series of short chapters that deal with a specific concept (priming, anchoring, ...), a specific application (99 cent pricing, Free!, ...) or an exploration of influencing factors (intelligence, race, gender, ...).
It's written in an entertaining anecdotal style that doesn't require any previous knowledge on the part of the reader. Anyone interested in understanding how humans can be influenced to find certain prices more attractive will benefit from reading this book. Once you've read this book you'll never look at a restaurant menu in the same way again.
Format:Hardcover
As a twitter buddy of mine pointed out, with a name like Bill Poundstone you'd be destined to write this book. It's an easy read with plenty of interesting anecdotes which serve to highlight Poundstone's exposition of behavioural economics as it relates to pricing. Brief histories of the personalities involved in the subject helped to sustain my interest; experimental design is important, but it can be a little dull reading about it.
I'm a money freak - history, philosophy, sociology of money - so I approached the book from this perspective. However, I think it would be of interest to the business reader, the academic or indeed the general reader. It gives the reader an insight into the techniques that can be used to set - and achieve - a price. Poundstone shows that what we think about price very much depends on context. On its own, the understanding of the power of anchoring - a bid/offer that sets context for and influences how you'll feel about a price- will repay you the cost of the book.
I'm a money freak - history, philosophy, sociology of money - so I approached the book from this perspective. However, I think it would be of interest to the business reader, the academic or indeed the general reader. It gives the reader an insight into the techniques that can be used to set - and achieve - a price. Poundstone shows that what we think about price very much depends on context. On its own, the understanding of the power of anchoring - a bid/offer that sets context for and influences how you'll feel about a price- will repay you the cost of the book.
Format:Hardcover
This is the latest in a long line of excellent popular science books by William Poundstone. Its topic is "behavioural decision theory", the study of how individuals make systematically irrational decisions in choice situations, risky gambles (where the probabilities are known), and uncertain gambles (where probabilities are unknown).
A lot of this field has focused on the latter two segments: decision making under risk and uncertainty. This was in some ways due to a methodological quirk, as these two scenarios were much easier to test with experiments, questionnaires, and real-life data.
Poundstone covers both these areas, but he also looks at how some companies are beginning to exploit consumers' common irrationalities. For instance, a fundamental axiom of rational choice theory is the "independence of irrelevant alternatives". Say you are choosing between good A and good B. Adding a third good to the choice menu -- good C -- shouldn't affect your original choice between good A and good B. Say you initially chose good A from the set {A,B}; then, the independence of irrelevant alternatives states that you shouldn't then choose good B from the set {A,B,C} (although you could choose C).
This axiom frequently gets violated in the real world, and clever marketers are wising up to this. Say you are choosing from two vacuum cleaners: a very cheap cleaner (A), and a more expensive model (B). In this case many people would choose A. However, the company can alter your choice by adding a third vacuum cleaner: an incredibly expensive state of the art model costing thousands of pounds (C). Even if you will never buy this new vacuum cleaner (it is an irrelevant alternative), it can still alter your choice: by comparison it will make model B seem much less expensive than before, and will make A seem like a shoddy bargain basement model. The mere presence of C has shifted consumers into spending much more money on vacuum cleaners than they did before, even if nobody buys C.
This book is a lot of fun and well worth the read.
A lot of this field has focused on the latter two segments: decision making under risk and uncertainty. This was in some ways due to a methodological quirk, as these two scenarios were much easier to test with experiments, questionnaires, and real-life data.
Poundstone covers both these areas, but he also looks at how some companies are beginning to exploit consumers' common irrationalities. For instance, a fundamental axiom of rational choice theory is the "independence of irrelevant alternatives". Say you are choosing between good A and good B. Adding a third good to the choice menu -- good C -- shouldn't affect your original choice between good A and good B. Say you initially chose good A from the set {A,B}; then, the independence of irrelevant alternatives states that you shouldn't then choose good B from the set {A,B,C} (although you could choose C).
This axiom frequently gets violated in the real world, and clever marketers are wising up to this. Say you are choosing from two vacuum cleaners: a very cheap cleaner (A), and a more expensive model (B). In this case many people would choose A. However, the company can alter your choice by adding a third vacuum cleaner: an incredibly expensive state of the art model costing thousands of pounds (C). Even if you will never buy this new vacuum cleaner (it is an irrelevant alternative), it can still alter your choice: by comparison it will make model B seem much less expensive than before, and will make A seem like a shoddy bargain basement model. The mere presence of C has shifted consumers into spending much more money on vacuum cleaners than they did before, even if nobody buys C.
This book is a lot of fun and well worth the read.
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Most Recent Customer Reviews
worth the money
William Poundstone has been mining the weirder reaches of reality since Malcolm Gladwell was in short trousers. Read more
Published 23 months ago by James-philip Harries
excellent book
"'Menus,' he said, 'are supposed to be the classic example of free choice, but menu designers have found that there're many ways of getting you to order what the restaurant wants... Read more
Published on 24 Feb 2010 by Mr. Stephen Hendry
Listmania!
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