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

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

3.62 of 5 stars 3.62 · rating details · 379 ratings · 82 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

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Hardcover, 336 pages

Published January 5th 2010 by Hill and Wang (first published January 1st 2010)

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Jan 24, 2011 Nenia Campbell rated it 5 of 5 stars · review of another edition

Shelves: x-2010s, reviewed

Priceless represents the juncture where psychology and economics meet. And can I say that that this book deserves waaaaaaay more reviews than it actually has? Seriously, anyone who wants a case study in the irrational behavior of humans when it comes to fiscal matters has to mark this book as a must-read, because it explains EVERYTHING.

I was actually at the supermarket the other day, and noticed principles mentioned in this book being put into action. I'll give you two examples.

Example (a): Ther...more Priceless represents the juncture where psychology and economics meet. And can I say that that this book deserves waaaaaaay more reviews than it actually has? Seriously, anyone who wants a case study in the irrational behavior of humans when it comes to fiscal matters has to mark this book as a must-read, because it explains EVERYTHING.

I was actually at the supermarket the other day, and noticed principles mentioned in this book being put into action. I'll give you two examples.

Example (a): There was a sale on cases of soda. You could buy three of these cases for $10 (ordinarily, they were a little over $3.50 per case). In the refrigerated section RIGHT BEHIND THIS AISLE were bottled sodas of the same brand, selling for about $1.60 each. Now, a wise consumer would obviously pick the bulk option because you're getting more (roughly fourfold) of your money's worth, but no. I almost never see consumers with three cases of soda in their carts. Instead, I see almost everyone with the single bottle or can of soda.

Now, if you think about this from an economical perspective, this is absolutely ri-bloody-diculous. This is where the psychology aspect comes in (and part of this is my own opinion, from reading through the lines): the high price of the bottled soda is a convenience fee. You're not only paying for your last minute decision to buy the soda, but paying for the satisfaction of not getting dirty looks in the supermarket for being a "pig." There is nothing greedy about buying a single soda, whereas in a culture that is obsessed with fat and calorie counting, you might feel like everyone is thinking "God, no wonder you're so fat." Also, if you buy a soda at the last minute before checkout, maybe just realizing how parched you are, you're also paying a price for instant gratification. Buying the cases means waiting. It's the same reason airline tickets are so much cheaper when you buy them months in advance, as opposed to the day before Thanksgiving.

Example (b) is slightly less interesting, but more relevant. There is a generic brand particular to this store in question. Usually, the generic brand is several cents cheaper than the name brands. However, occasionally the name brands go on sale and become (this is the brilliant bit) CHEAPER than the generic brands--sometimes significantly so! Just the other day, I was cackling to myself because I was buying name brand tuna for 61-cents a can when the generic was $1! What a steal!

Or was it? I really have no idea what the cost of tuna really is, so I am forced to gravitate towards those sale signs like a moth to a light. My roommate was laughing at me because I needed a new toothbrush and was becoming frantic because there were several packages of four, ranging from $3.50 to $6.50. There were several brands, including the generic, and NO PERCEIVABLE DIFFERENCE between any of the actual brushes. So, you guessed it, I chose the name brand cheaper than the generic brand, because I was using the generic brand as an anchor (at least, in part--I'm no economist, but less than a dollar per toothbrush seems like a good deal to me). It just goes to show that we're living in the Matrix version of economics, and our entire reality is completely subjective, and perfectly capable of being manipulated at chilling levels. Totally mindblowing. I'm definitely going to psychoanalyze the pricing of every store I go to from now on.(less)

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Aug 03, 2011 Tobias added it · review of another edition

Fascinating book about price anchoring, the fact that people what the price of anything should be when they don't have adequate reference points and take cues/clues from anything in their environment even a randomly quoted number. The book goes on to talk about prospect theory and the value people place on various gambles; pricing tricks the psychology of restaurant menus; free 72 oz Steak meals and many other devious marketing tricks. The book attacks the idea of market value but doesn't follow...more

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Jan 06, 2013 Greg rated it 4 of 5 stars

Probably worth buying to refer back to. First half is boring and dry. Rehashes Ultimatum and Dictator experiments ad nauseum. The last part of book is great though. Talks about real-life examples of pricing, and how to decipher the different pricing tricks used. Pricing is all relative, and in many cases is completely independent of any "market".

- One common trick is to put something insanely expensive as the flagship product and emphasize that. Jewelry stores, high fashion stores and restauran...more Probably worth buying to refer back to. First half is boring and dry. Rehashes Ultimatum and Dictator experiments ad nauseum. The last part of book is great though. Talks about real-life examples of pricing, and how to decipher the different pricing tricks used. Pricing is all relative, and in many cases is completely independent of any "market".

- One common trick is to put something insanely expensive as the flagship product and emphasize that. Jewelry stores, high fashion stores and restaurants all do this. Then, place a less expensive item near it; people will think it's reasonably priced and buy that instead, even though compared to the market at large it's still way overpriced.

- People choose what appears to be the most reasonably priced item. Lacking the appropriate context, this usually means buying the item priced slightly lower than the most expensive item, especially if it's marketed as a premium product. People avoid the most expensive product to avoid overpaying, but they also avoid cheap stuff, because of the perception of low quality. Therefore, the product priced a little less than the most expensive one wins

- Fake sales prices are very effective, because people believe they're getting more for less. If two products are about the same in all aspects, one is priced at $29.99, and the other is sold as regularly $34.99 but on sale for $29.99, people will buy the second item. This also gives a cushion to raise prices in the future, as you're just "reducing the sales price", rather than increasing the price.

- Money illusion (insensitivity to inflation) is very real. People prefer perceived increases in wages (3% raise, but with 2% increase in inflation) than real increases (0% raise, but -2% inflation)

- Something about ending in 99 really appeals to us. If you price the same item to different people at $40.00, $39.99 and $34.99, dropping the price to $39.99 results in a sales increase (in terms of units) greater than dropping the price to $34.99 (or was it $30?).
(less)

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Jun 08, 2012 Nilesh rated it 5 of 5 stars

Shelves: economic-and-finance, good-non-fiction

Priceless opened a whole new world to me, a world that was always right in front of my eyes. Behavioral study fields always have fascinating tales. Tales about our own behaviour that defy logic and tell us something weird about ourselves. But most books on the subject fail to go past the tagging of these phenomenon and mocking at our own irrationality. They spend inordinate time going after the classical theories. This is where Priceless has something different to offer.

To be sure, the well-writ...more

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Apr 09, 2011 Julie rated it 3 of 5 stars

Shelves: business-and-society

Oscar Wilde once said, "The cynic knows the price of everything and the value of nothing." William Poundstone might argue that the average person doesn't know the price of anything, either. Or, rather, that prices are arbitrary constructions that aren't really based on value at all.

Priceless is a foray into behavioral economics and social psychology as they apply to price and money. A lot of the research Poundstone brings forward I knew about already, and giants in the field (such as Tversky, Ka...more Oscar Wilde once said, "The cynic knows the price of everything and the value of nothing." William Poundstone might argue that the average person doesn't know the price of anything, either. Or, rather, that prices are arbitrary constructions that aren't really based on value at all.

Priceless is a foray into behavioral economics and social psychology as they apply to price and money. A lot of the research Poundstone brings forward I knew about already, and giants in the field (such as Tversky, Kaneman, and Ariely) are amply represented. But really, Priceless is a walk through our own minds and how we come up with the price we're willing to pay for things, especially when we have no reference points.

Taken together, the results of all this research could be disheartening. They show that people are easily manipulated by "anchors" (i.e. a reference number, which may be completely random), even while insisting that anchors have no effect on them. People will pay more for a steak dinner (or anything else, really) if there's a super-expensive option presented that no one buys. Just having the super-expensive $150 steak on the menu makes your $50 plate of chicken seem far more reasonable a purchase.

And on and on. Why did the jury award $2.9 to Stella Liebeck in the infamous "I spilled coffee on my lap" case against McDonalds? Because her lawyer suggested that the jury award punitive damages equal to "one or two days of the company's worldwide coffee sales." This is completely arbitrary (why worldwide? why coffee sales? why a day or two?), but it framed the question and led to a the multi-million dollar fine.

Priceless demonstrates that people pay astronomical prices for things they don't want. They'll claim one deal is better and yet consistently chose another. Their interactions with strangers change when there are other people looking, or even just a picture of eyes. Their preferences change drastically when even a small amount of uncertainty (1%) is introduced. Or when they're presented with something "free." And, through everything, they'll continue to insist that these criteria have absolutely no effect on them.

It's a fascinating read and worth it to know (and attempt to counter) your internal biases. Recommended.(less)

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Apr 07, 2013 David Dinaburg rated it 4 of 5 stars

A great weight descends upon Pricless: The Myth of Fair Value (and How to Take Advantage of It) from the very beginning. The recurring scheme of positioning a non-fiction book as a treatise on insider tricks—a practical guide to self-help, fulfilling the promises of personal actualization—is the sole misstep in an otherwise delightful experience. Truncating the title, leaving it Priceless: The Myth of Fair Value is an apt signifier; (and How to Take Advantage of It) is one step removed from “Pri...more A great weight descends upon Pricless: The Myth of Fair Value (and How to Take Advantage of It) from the very beginning. The recurring scheme of positioning a non-fiction book as a treatise on insider tricks—a practical guide to self-help, fulfilling the promises of personal actualization—is the sole misstep in an otherwise delightful experience. Truncating the title, leaving it Priceless: The Myth of Fair Value is an apt signifier; (and How to Take Advantage of It) is one step removed from “Pricing Structures THEY Don’t Want You To Know.”

There is a fair bit of a direct information:

Say you’ve got a $100 product. You don’t sell it for $100, goodness no. It’s $149 discounted to $99. As time goes by, inflation nibbles at your product and you have to raise the price. Don’t raise the price—lower the discount. The official price, which nobody pays, remains $149. But now you discount it to $119. For a lot of things, like newsletter subscriptions, many customers won’t notice. They won’t remember the old price, and they haven’t a clue what the product should be selling for. Instead, they’ll fall for the lure of getting a $149 product for “only” $119. More time passes, and inflation never sleeps. You tell your customers that, in view of increased costs, it will be necessary to raise prices, from $149 to $179. But for selected customers (meaning basically everyone), you’re increasing the discount so that they pay not a penny more than they did before, $119. Nobody can object to this. The price remains the same. This lays the groundwork for the next ratchet upward.

Much of Priceless is filled with these technical vignettes, launched with such alacrity that the entire experience resembles nothing so much as befriending an economist while on vacation; the colloquial tone belies the technicality and the storyteller’s brevity carries throughout all fifty seven snappy chapters. Priceless commands the air of Mai Tais and Aloha shirts: “A three-martini lunch converts complex problems into deceptively simple ones.” In other words, hang loose, friend, we’ll figure this out together.

There is a constant lure of self-awareness in the latter half as you are confronted with phrasing that places the reader into the role of the experimental subject. “You have a choice of two equally fine chocolates. One is small and shaped like a heart. The other is big and shaped like a cockroach. Which do you prefer?” It’s a shortcut to engagement, a cheap and easy way to personalize a subject that is often seem as byzantine; those should interpreted as lauds, not pejoratives. “Christopher Hsee has posed this dilemma to students and friends, finding that most choose the cockroach chocolate.” There is no dryness or tedium to toil through; the background historicity of the first half informs a better understanding of the contemporary practicality in the second. “The kicker is that when Hsee asks people which chocolate they would enjoy more, most admit it’s the smaller one, shaped like a heart.”(less)

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Jun 12, 2010 Elizabeth Olson rated it 3 of 5 stars

Shelves: read-2010

The strength of this book is the author's gift for spinning engaging narrative from otherwise dry studies at the intersection of economics and psychology. Poundstone's well-supported premise is that none of us, even experts and the most studiously prepared shopper, have any real idea what anything should cost. It seems we're all unduly, and unconsciously, influenced by "anchor" numbers unrelated to the price of the item or service in question. Two examples: A ridiculously expensive item next to...more

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Dec 07, 2011 Steven Salaita rated it 2 of 5 stars

Okay, that's it. This is the last time I read a book that advertises itself as providing some mindblowing insight into human behavior. When such books are published by corporate houses, they end up being horribly overhyped. (I'm looking at you, Freakonomics and, it hurts just to type it, Superfreakonomics; Malcolm Gladwell, all of it; and the worst offender of all time, The Murderer Next Door.)

I jacked this up to two stars because it has a few tidbits of note. Here are some of the things it doe...more

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Jun 20, 2010 Todd Sattersten rated it 5 of 5 stars

Poundstone told me he started researching a book about Daniel Kahneman and Amos Tversky, two of the most important researchers in the area of decision making over the last fifty years. What he found was that pricing was a good point around which to tell their story and Poundstone covers much more than that Priceless. The narrative takes us from the field of psychophysics to a $72 steak in Amarillo, Texas, all along the way teaching us how easily we can be swayed one way or another.

This bit is a...more

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Mar 20, 2010 Christina rated it 4 of 5 stars

People are easily manipulated. That's the main message of this book, and it's backed with tons of research. But it doesn't get so bogged down in the science that it loses the subject. Poundstone is a master at making a point without boring the reader.

Among other things, this book teaches that:

* It's all in the comparison. A $50 gift from Aunt Marge for your wedding is wonderful, unless you were expecting her to give you $200, like she did your sister.

* Prices are constantly manipulated so that...more

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May 17, 2013 Cheshire Public Library added it

Shelves: featured-on-cheshire-library-blog

William Poundstone discusses the psychology involved in pricing items and making [Cover]purchases. Do you remember the gas crises of the ’70′s, when gas stations waged war by dropping to 48 6/10ths, or 54 and 3/10ths instead of 9/10ths? And we rushed to save a quarter of a penny? Do you wonder how stores can afford to give 60% sale and stay in business? Or why you jump for joy when you snatch an item at Marshall’s that reads $59 – Compare at $135 and think you’re getting the steal of the century...more

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Jun 12, 2010 Uwe Hook rated it 4 of 5 stars

We are primates. Not homo economicus, as we pretend to be.
This is not a text book, more of an entertaining book spinning stories how marketers, scientists and companies exploit our weak mind each and every day. We're so easily fooled, it's mind-numbing.
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...more

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Nov 28, 2010 Converse rated it 4 of 5 stars

Shelves: behavior, economics, non-fiction

How much money something (your salary, an item you purchase, a bet) is worth is bizarrely variable depending upon context. The mention of a number, including ones that have nothing to do with the transaction at hand, can alter the price someone demands or receives. Evaluating job offers one at a time or under circumstances in which you compare two offers can change how much salary you demand. And adding any sort of uncertainty, such as in a bet, makes things even more complicated. How much we ar...more

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Sep 13, 2010 May-Ling rated it 5 of 5 stars

Shelves: saving-the-world

i feel like this book enlightened my sensibilities about prices. it's funny, since part of my job responsibilities include pricing for stanford's reunion homecoming - i was even able to pick up some tidbits that could help in this arena. in general, i think this is a book for everyone, since we should all think critically about the types of purchases we make each day.

this book is chock full of case studies that just blew my mind. our family's extremely logical about pricing and we mull over purc...more

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Jul 08, 2010 Jamie rated it 3 of 5 stars

I've always been interested in the psychology of consumerism, along with related topics like marketing and purchasing behaviors. Both for how shameless it is and how readily we (myself included) seem to fall for what really amount to simple psychological slight of hand. Priceless: The Myth of Fair Value (And How to Take Advantage of It) by William Poundstone looked like it was going to scratch that itch, and while it does to some extent I'm left a little off balance by the book.

If you look at Pr...more I've always been interested in the psychology of consumerism, along with related topics like marketing and purchasing behaviors. Both for how shameless it is and how readily we (myself included) seem to fall for what really amount to simple psychological slight of hand. Priceless: The Myth of Fair Value (And How to Take Advantage of It) by William Poundstone looked like it was going to scratch that itch, and while it does to some extent I'm left a little off balance by the book.

If you look at Priceless as a whole, it seems to hit a lot of the right notes for me. It takes practical questions like why we buy what we do and why marketers do what they do, and it answers them by turning to theories and well established phenomenon from psychology --most notably Amos Tversky and Daniel Kahneman's prospect theory. There's chapters on how menu consultants use psychological anchoring and the contrast effect to get you to order what they want, an examination of the effectiveness of prices ending in ".99" and other such "charm" numbers, the allure of all-you-can-eat buffets, the power of breaking out many small benefits in a sales pitch (i.e., the "But wait! There's more!" trope), and other such fascinating topics. And overall I'd say it's a good read for all that.

The main thing that keeps me from whole heartedly recommending Priceless to any reader, though, is that none of that good stuff really starts until page 143 out of about 290. The entire front HALF of the book focuses less on the specifics I listed above and more on the general case of prospect theory and its history. In places it reads more like a mini-biography of Kahneman and Tversky as well as some of their predecessors. And when he's not doing this "history of science" thing, Poundstone is going into some pretty gnarly specifics on the science (both from psychology and economics) of all this. Now personally, I loved all this and ate it up because while I knew most of it I was interested to get some biographical information and see it all in a different context. It's just kind of hard to recommend to someone who's walking into the topic without any other education.

And while the book does turn the corner halfway through when it starts getting into some practical and fascinating specifics, those chapters do assume that you've read and understood most of the stuff in the earlier, technical parts. The discussion of our preference for all-expenses-included vacation resorts, for example, assumes that you grokked an earlier discussion about the convex nature of the value function to the left of an individual's reference point. Or somesuch.

It's an interesting way to structure the book, as opposed to the typical approach of tackling one topic (say menu design or the fallibility of real estate agents) and then presenting all the related research in one chapter. One advantage to the approach in Priceless is that the latter, topical chapters are all really short, averaging just 3 or 4 pages each. I think this will make it a pretty good reference book and I enjoyed it overall, but any recommendation has to come with the caveot that you should know what you're in for.(less)

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Jan 07, 2013 Scott rated it 3 of 5 stars

Pundstone divides the book into 4 parts, but it felt more like 2 to me: background and application. I found myself skimming through several chapters. It's quite interesting, and the background is quite detailed. What I found most interesting were the experiments with subjects who were told the expected choice ahead of time and still exhibited the behavior, all the while saying "I'm not going to choose that."

Still, I felt like some of the chapters were redundant or dragged on too long. I did a l...more

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Apr 11, 2012 Melinda McCrady rated it 2 of 5 stars

Anyone else find the "Money Pump" chapter confusing?

At the risk of sounding feeble-minded, I'm hoping someone here can clarify for me. Specifically, starting with page 66, when the author uses quotes of experiment subjects to explain their own irrational behavior regarding preference reversal:

"If the odds were...heavier in favor of winning...I would pay about 3/4 of the amount I would expect to win. If the reverse were true, I would ask the experimenter to pay me about...1/2 of the amount I coul...more

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Jul 16, 2010 Ula rated it 2 of 5 stars

I like reading econ books about how the market and individual market choices aren't rational and that we don't all act to maximize benefits, so I thought I'd be way into this book. There are lots of interesting little facts but the incredibly short chapters made it a bit choppy and hard to find any bigger theme. Some chapters were really interesting, some were really boring, and some got really repetitive. The whole anchoring concept is interesting but I felt like it was approached over and over...more

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Apr 08, 2012 Andrew Saul rated it 5 of 5 stars

If you are selling anything anywhere and you haven't read this book, you are missing a vital part of your business. This book takes the current pricing research and behavioral economics research related to pricing and summaries their findings.

It's amazing what can be achieved and what can be conveyed to consumers with a simple price. Not only can you take advantage of it in your own business (even if that's just selling some old stuff on eBay) but you can use it when you are the consumer to gre...more

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May 23, 2012 Ilya rated it 3 of 5 stars

Shelves: economics

Neoclassical economics says that given fixed costs to produce them, in a free market the prices of goods and services are determined by the demand for them, which is determined by their marginal utility to the consumers. This is as meaningful as saying that the demand for food is determined by its marginal nutritional content. Yes, people want to eat food and not non-food, though in a hungry year peasants can eat plant parts that are not usually considered food, but the mental mechanisms to dete...more Neoclassical economics says that given fixed costs to produce them, in a free market the prices of goods and services are determined by the demand for them, which is determined by their marginal utility to the consumers. This is as meaningful as saying that the demand for food is determined by its marginal nutritional content. Yes, people want to eat food and not non-food, though in a hungry year peasants can eat plant parts that are not usually considered food, but the mental mechanisms to determine the nutritional content of food are imperfect, and a whole industry (the junk food industry) has sprung up to exploit its bugs. Likewise, the mental mechanism to decide how much something is worth to oneself, and whether its price exceeds this worth, is imperfect, a whole branch of marketing has sprung up to exploit its bugs, and a whole branch of economics called behavioral economics has sprung up to explore them.

It is much easier to tell whether an object is heavier than, is lighter than, or has the same weight as another object than it is to name the weight of an object in pounds. Likewise, it is much easier for a consumer to tell whether a good or a service should be more expensive than, cheaper than, or have the same price as another than it is to name its fair price. How much should something cost? What it used to cost before; if there is inflation, and the can of peanut butter can no longer be profitably sold at the old price, then perhaps it should have a concave bottom instead of a flat one, so its nominal price doesn't change even though it contains less butter. After a while this doesn't work, so this brand should be discontinued, and a different one launched. What other similar products cost; an SMS is like a phone call, so it also costs the consumer a few cents apiece, even though it costs the provider company something like 1/1000 of a cent. If there is a more expensive premium and a less expensive regular version of the product, many consumers will eagerly buy the regular version thinking themselves smart, even though this is exactly what the seller expects them to do. The hundred-thousand-dollar watch may not sell a single copy, but it will sell many of the same manufacturer's ten-thousand-dollar watches. The author quotes a psychologist to the effect that this trick goes back to the seventeenth century: a merchant would sell one thing to a king, and something lesser to every courtier (I immediately thought of the Necklace Affair in pre-Revolutionary France). The same consideration applies to the same product across time: if consumers are told that something is being sold at a great discount from the regular price, they will buy it, even if the regular price is something no one ever pays. The same logic applies to the question "How much should someone be paid?" If someone finds out that another person in the same occupation makes more money, he will want at least as much, even if the extra pay will not make him appreciably happier. This can create a positive feedback loop for the salaries of TV stars and corporate CEOs, whose employers can afford to pay them millions.

Even in a free market, false advertising is illegal. Yet there is a fine line between lying and psychological manipulation. Though it is much harder to define, I would prefer that messing with the consumers' heads be as illegal as telling them outright untruths.(less)

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Jul 15, 2010 Tom rated it 4 of 5 stars

Very interesting (and kind of scary) read. Priceless starts off kind of slow with a lot of background in behavioral decision making theories and history. But once it gets going, the going is good.

To set the tone of how pricing decisions are made, the author delves into the theories of anchoring and adjustment with lab setting examples and studies. It's interesting to learn the subtle tricks that we use on on ourselves and can be used on others to influence their ideas of what a price should be...more

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Sep 05, 2010 John rated it 4 of 5 stars

An excellent book about the abstract concept of "price" and "value". The author starts the book by discussing studies conducted over the past 60 years that highlight some interesting facts about the human mind and human behavior. He shows the the human mind is wired to think relationally, not absolutely. He then gives example after example of pricing strategies and studies that take advantage of this "quirk" of the human mind. One of the main concepts he discusses is "anchoring"--the idea that w...more

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Dec 23, 2011 David rated it 4 of 5 stars

Shelves: read-econbiz

This book's big idea: Normal people under average contemporary circumstances can consistently be hoodwinked into making decisions against their own economic interest.

Define “normal people” as anyone with a average attention span and average load of worries, cares, responsibilities, and distractions.

Define “average contemporary circumstances” as the usual places and times when people are compelled to spend money, e.g., in crowded and noisy stores or markets, under the influence of salespeople on...more This book's big idea: Normal people under average contemporary circumstances can consistently be hoodwinked into making decisions against their own economic interest.

Define “normal people” as anyone with a average attention span and average load of worries, cares, responsibilities, and distractions.

Define “average contemporary circumstances” as the usual places and times when people are compelled to spend money, e.g., in crowded and noisy stores or markets, under the influence of salespeople on commission, or through websites designed in a deliberately manipulative manner.

Given the above, few people can do calculations in their heads with, at most, three or four variables. Most will struggle with two variables. A consulting industry, presumably populated by grown-ups with the same moral character as single-cell organisms, has grown up around exploiting this weakness in the human character. The result is the proliferation of unnecessarily complicated pricing systems and commercial gimmicks, including but not limited to customer loyalty programs, rebates, and cell phone contracts of Byzantine complexity. Faced with this, customers (also occasionally called in the book, I am not making this up, “suckers”) can then be distracted by a single high or low number, which the confused brain will seize on as the basis for a (bad) decision.

When younger, I was considered something of an extremist because I voiced the opinion that, if people who knowingly aided in the economic exploitation of other members of their society were publicly garrotted at half-time during the Super Bowl, and their corpses hung from the goalposts while birds pecked out their eyes, it might cut down on the number of people who participated in such exploitation, thus benefitting society. However, I have mellowed and become more conservative, a result of old age (certainly) and wisdom (perhaps). I now believe that people deserve an opportunity to reconsider the error of their ways. So perhaps all that needs to be done is to put exploiters in the stocks and pelt them with old fruits and vegetables, to let them know that their activities are not universally approved-of. Strangely, this comparatively-reasonable opinion, when voiced, still makes people move away from me at social gatherings.

But I digress.

In summary, this book is a readable popular summary of the disciplined and painstaking research which shows that, while crowds might have some wisdom, the individuals and small groups that make most economic decisions have very little.

Interviews with the author about this book on National Public Radio's "The Splendid Table" here and on "Marketplace" here.(less)

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Apr 12, 2010 Bill Weaver rated it 4 of 5 stars

I do not know what I was listening to when I heard about this book, but it intrigued me. The first chapter starts off with the lady in New Mexico who won millions of dollars for being burnt when a cup of hot coffee from McDonald's accidentally spilled on her. The second chapter starts with how clueless we are about price. The book continues with examples of how we are manipulated with different pricing structures. Companies will play with packaging to make us believe that we are getting the same...more

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Sep 17, 2011 Tcpils rated it 1 of 5 stars

People can be influenced and manipulated when it comes to making decisions about value and price. There you go. I just saved you the time it would take you to read this boring book. The main portion of the book is devoted to endlessly repeating, with slight variations, an experiment wherein college students (college students!) are given a choice of how to share $10 with a stranger. There is nothing profound here except how these researchers are riding the grant money gravy train.

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Jul 23, 2011 Chad Post rated it 5 of 5 stars

Excellent summary of a ton of behavioral economics findings. Probably the best book in this vein that I've read, in part because Poundstone doesn't write like he has anything personal at stake--he's just sharing all this interesting info. In part because Poundstone's examples (almost every chapter opens with an anecdote or a portrait of an interesting figure) are so damn good.

The first half of the book lays out a few crucial concepts--anchoring, price coherence, etc., and the second spells these...more

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Mar 15, 2010 Salina rated it 4 of 5 stars

Wow! As if I was in any doubt that I am being manipulated my the various retailers out there, this certainly clarified things for me. This book describes the "psychology" of pricing and the initial studies that led to many pricing strategies we see now in the stores. Why do so many prices end with 99? Why do some menus have no prices and some not in a straight line? There's a reason. This book also helps me understand some of my own buying behaviour and how subjective the concept of "value" is.

I...more

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Jan 01, 2010 Anthony marked it as to-read Recommends it for: anyone!

Recommended to Anthony by: NPR: Science Friday

I just heard a great interview with the author William Poundstone. It is unbelievable how we are tricked into buying what is most in the interest of the seller. He share incredible insights into today's selling methods. I am really looking forward to reading this book. From listening to the interview on NPR' Science Friday alone I learned so many things to consider when buying a product. Especially form a psychological perspective this book promises to be great!

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Jul 23, 2011 Paul Childs rated it 4 of 5 stars · review of another edition

Shelves: economics

This is an interesting book on how Prices are manipulated in many of the everyday transactions where we incorrectly think we are getting a fair price on the things we buy.

The first half of the book is heavy on the psychology and was less interesting to me. The second half contained the interesting real world examples of why this is important. I found these chapters to be the best part of the book.

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Oct 08, 2012 Erikka rated it 4 of 5 stars

Shelves: 2012, non-fiction

This book is a fantastic look at why prices do what they do, and why we not only continue to pay them, but continue to not question them. In short? Because we truly have no ability to place a value on anything, and because we tend to use numbers in our environment as anchors in determining what we believe to be fair. The plethora of scientific studies, the well-told anecdotes, and the well-organized structure of the book as a whole make this a wonderful read for anyone looking to get their menta...more

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About William Poundstone

When I was an eight-year-old boy in West Virginia, a friend of my father's gave me a paperback copy of Martin Gardner's Mathematical Puzzles & Diversions. He gave it to me because (a) it had all these logic puzzles in it, and they were "too hard" for him and (b) my father had boasted that I was a pretty bright kid. So maybe I would like it. As I thumbed through the Gardner book, it struck me a...more

More about William Poundstone...

Books by William Poundstone

Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street

How Would You Move Mount Fuji?: Microsoft's Cult of the Puzzle: How the World's Smartest Companies Select the Most Creative Thinkers

Are You Smart Enough to Work at Google?: Trick Questions, Zen-like Riddles, Insanely Difficult Puzzles, and Other Devious Interviewing Techniques You Need to Know to Get a Job Anywhere in the New Economy

Labyrinths of Reason: Paradox, Puzzles and the Frailty of Knowledge

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BBCode	[url=http://www.goodreads.com/book/show/6929509-priceless?utm_medium=api&utm_source=blog_book][img]http://d.gr-assets.com/books/1312060624l/6929509.jpg[/img][/url] [url=http://www.goodreads.com/book/show/6929509-priceless?utm_medium=api&utm_source=blog_book]Priceless: The Myth of Fair Value by William Poundstone[/url]

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

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