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

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

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  • Create Date:2022-03-17 07:53:39
  • Update Date:2025-09-06
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  • Author:William Poundstone
  • ISBN:0809078813
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Summary

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。

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Reviews

Anbu Manoharan

Not as interesting as I thought it would be。 Abandoned at 26%。

Rodrigo Polacco

O livro é excelente。 O autor pesquisou as mais diversas coisas que podem influenciar o preço e tomada de decisão de compra/negociação。 Tem um riquíssimo capítulo com notas com os nomes das pesquisas que usou como base para o livro e para os temas que mais me interessaram me ajudou bastante para aprofundar。 Impossível não ler o livro e refletir sobre as estratégias de preço e psicologia do preço que as empresas usam, mesmo que sem reflexão profunda ao copiarem a estratégia de um concorrente。

EL

First few chapters were most eye-opening and practical。 After that, I struggled to stay engaged。

Michiel

Priceless discusses the irrationality of punting a number on a value。 Enjoyable read with lots of trivia that will let you be the star of cocktail parties。

Renée Remsberg

the first half of the book was great but then i got kind of slow so much so that i was inclined to give it three stars。 the last two pages, however, saved the book from that fate and it is now a four star read in my eyes

Tanya Fabrychenko

Очень качественный материал об исследованиях в области теории принятия решений и их влиянии на возникновение всякого рода фишечек современного ценообразования。 Достаточно просто и доступно описана теория, но даже если к ней будут вопросики то в каждом разделе реальный пример, который окончательно все разложит по полкам。 Познавательно, приятно, хорошо。

Paul Sand

[Imported automatically from my blog。 Some formatting there may not have translated here。] I'm pretty sure I heard good things about this book at some point in the recent past, which caused me to plunk it on my get-at-library list。 I was slightly disappointed。 The author, William Poundstone, has a mission accurately summed up in his subtitle: prices are a shared illusion, easily manipulated by dinking with the all-too-human psychology of buyers and sellers。 The book has 57 chapters, some only a [Imported automatically from my blog。 Some formatting there may not have translated here。] I'm pretty sure I heard good things about this book at some point in the recent past, which caused me to plunk it on my get-at-library list。 I was slightly disappointed。 The author, William Poundstone, has a mission accurately summed up in his subtitle: prices are a shared illusion, easily manipulated by dinking with the all-too-human psychology of buyers and sellers。 The book has 57 chapters, some only a couple of pages。 Each purports to draw lessons from psychological studies。 Poundstone is especially (and deservedly) reverent toward the groundbreaking research carried out by Daniel Kahneman and Amos Tversky。 The main problem stems from the book's age: published in 2010。 So the author is not exactly breaking fresh ground。 Daniel Kahneman's own book, Thinking Fast and Slow, came out in 2011。 And if you've read that ( as I have ), then you'll have already seen a lot of stuff that's discussed in Priceless。 But it's worse than just being old。 Poundstone assumes that all those studies he quotes are reliable。 That was a reasonable position to take in 2010, but not so much today。 For example, the work on "priming": where exposure to an idea, a suggestion, an image … whatever, causes our unconscious mind to make it more likely to raise future occurrences to our mental attention。 Sounds nice, plausible, … but the research that purported to demonstrate it turned out out to be irreproducible。 Since I, as a 2021 reader, knew that already, it cast a cloud over the dozens of studies Poundstone cites to bolster his thesis。 I kept wondering has anyone tried reproducing this? This guy seems to think a lot of the other research in social psychology is bunk。 I'm not one to judge。 (But it does help my cognitive bias a lot, I get to auto-dismiss research when I don't like the results。) So I recommend reading Poundstone's book with a lot of healthy skepticism。 But (hey) he could be right。 So next time you enter into a price negotiation, try his "anchoring" strategy: be the first one to mention a price, set it "too high" if you're the seller, "too low" if you're the buyer。 You won't get what you want, but what you get will be more in your favor。 Allegedly。 。。。more

Kristine

First half goes through experiments psychologists have done to prove behavior and decision making, second half consists more of case studies and real world examples of pricing manipulation。

Corey Alguire

Fascinating readInteresting read on the psychology behind economic decision making。 I found some useful insight into the fallacies underlying large parts of contemporary economic theory。

Dmitry Polupan

Радаль, книга не вартує витраченого часу。 Ефект якорів та телрія перспектив, єдини що стосується цін。 А так, крига - збірник результатів поведінкових досліджень。

Warren Mcpherson

An exploration of the psychology of pricing。 The book lays out some high-level theories that relate to pricing and then details experiments that show some interesting features of human behavior as it relates to pricing and value。 There are some interesting nuggets about how people react to the idea of fairness and how many elements of consumer experience are manipulated。 It's a bit hard to put your finger on a central insight, the book sort of ends with a shrug。 An exploration of the psychology of pricing。 The book lays out some high-level theories that relate to pricing and then details experiments that show some interesting features of human behavior as it relates to pricing and value。 There are some interesting nuggets about how people react to the idea of fairness and how many elements of consumer experience are manipulated。 It's a bit hard to put your finger on a central insight, the book sort of ends with a shrug。 。。。more

Fady Chreih

All you need to know on PricingA real compendium on pricing, extremely valuable for business and personal use。 Read it ready to make lots of notes and adnotations。 It is a book that has to be let to sunk in your decision making processes。

Kalle Wescott

Full review of the psychology of pricing, and a little bit of negotiation, including research papers and experiments。Told in a series of 55 short chapters, making it an easier read covering more topics, and more interesting overall。

Robert Gebhardt

It turns out that spending a couple of years studying behavioral econ, behavioral finance, and behavioral (fill in the blank), and reading Daniel Kahneman, Richard Thaler, Dan Ariely and the like, pretty much covers most of what this book seems to offer。 I'm only 50 pages in, but that's my impression, and skipping ahead I see the obligatory Ultimatum game, prospect theory, and other points。 I might come back to it if I want a rehash。 I expected this book to be more business-related, so this migh It turns out that spending a couple of years studying behavioral econ, behavioral finance, and behavioral (fill in the blank), and reading Daniel Kahneman, Richard Thaler, Dan Ariely and the like, pretty much covers most of what this book seems to offer。 I'm only 50 pages in, but that's my impression, and skipping ahead I see the obligatory Ultimatum game, prospect theory, and other points。 I might come back to it if I want a rehash。 I expected this book to be more business-related, so this might have been my fault。 。。。more

Zoe Tribley

A little boring at points because my brain rejects numbers and percentages and so there were full paragraphs of black out, but overall really interesting! Biggest takeaway - prices are arbitrary and it’s good experiences that give us happiness。 Not money。

Leia Rose

This book had many interesting and eye-opening facts; however, there seemed to be a lot of chapters that simply didn’t apply to the purpose of the book, and I found myself skimming those chapters until I got to one relating to price。

Katherine

Priceless is one of those books where you find yourself every few pages looking around for someone to tell about what you just read。 (Now imagine that sentence written well。)   The psychology of how we assign and evaluate prices, it turns out, is kind of wild stuff。 It's shocking to what degree suggestions and even random environmental cues influence our thinking about anything related to numbers-- price, quantity, size, etc。 And Poundstone's writing is approachable and fun。 To be honest, Pricel Priceless is one of those books where you find yourself every few pages looking around for someone to tell about what you just read。 (Now imagine that sentence written well。)   The psychology of how we assign and evaluate prices, it turns out, is kind of wild stuff。 It's shocking to what degree suggestions and even random environmental cues influence our thinking about anything related to numbers-- price, quantity, size, etc。 And Poundstone's writing is approachable and fun。 To be honest, Priceless was an exciting read。 It was only at the last several chapters that I got a little restless to think about something different。 Everyone should read this one。 Rounded down。 Highly recommend。  。。。more

AV

For a psychology nerd like me, it was a great read。 The book has detailed, experiments after experiments related to pricing, valuation (products), negotiation tactics (related to pricing) and other psychological concepts such as anchoring and prospect theory。Couple of reasons why it was a little downer for me were, - I bought it with an expectation to learn "how to price products", maybe based on real examples of the popular consumer products。 Sadly, this wasn't to be found anywhere。 In fact, on For a psychology nerd like me, it was a great read。 The book has detailed, experiments after experiments related to pricing, valuation (products), negotiation tactics (related to pricing) and other psychological concepts such as anchoring and prospect theory。Couple of reasons why it was a little downer for me were, - I bought it with an expectation to learn "how to price products", maybe based on real examples of the popular consumer products。 Sadly, this wasn't to be found anywhere。 In fact, only about a handful of products were mentioned in this regard and even they did not shed much light on how they were priced。- If the author assumes of his readers to take the concepts of pricing from this book and apply those effectively in real-life scenarios then a good way to do that would have been a conclusion listing all the concepts at the end。 As I said, because it's just reams of experiments contained in there, it's quite difficult to keep going back to recall a particular concept or learnings from a particular experiment。But even then, as I said, the content inside is really good。 A lot of things were new for me; hence, very interesting to know。 The book also emphasized upon some common human behaviour with respect to pricing, such as, - Nobody knows what the actual price of a product is。 Not the buyer。 Not even the seller。- Anchoring is a potent method to get the price you want for anything。- The effect of money, alcohol, gender and even fairness while making price / wage related decisions- Selling not the entire product but as a layer of features- Charm Pricing and the value of zeroesAnd a whole lot more。 。。。more

Abhijeet

Brilliant work! Cracking start to the first chapter, and equally good later part。 (However the middle part was little boring (around chapter 12 onward; guess i will have to do a re-run)

Olle Qvarnström

Fabulous topic and concept, somewhat of a dull delivery。 It's basically a long book with very short chapters about pricing and the way humans can't appreciate the correct value, randomly drawn without much coherence。 Go read something on behavioural finance instead。 3/5 for interesting topic。 Fabulous topic and concept, somewhat of a dull delivery。 It's basically a long book with very short chapters about pricing and the way humans can't appreciate the correct value, randomly drawn without much coherence。 Go read something on behavioural finance instead。 3/5 for interesting topic。 。。。more

Ajay Palekar

Overall, was unamused and slightly bored by the book。 Mislead by the tag-line and reviews。 Didn't find much value in reading it and would not recommend。 It's redemption lies in its wealth of examples of the mental quirks that could be exploited by marketers, but it lacks overarching structure or principles that could be utilized by aspiring marketers or now knowledgeable consumers looking to defend themselves。 Other books also do a better job of speaking of these psychological and behavioral fla Overall, was unamused and slightly bored by the book。 Mislead by the tag-line and reviews。 Didn't find much value in reading it and would not recommend。 It's redemption lies in its wealth of examples of the mental quirks that could be exploited by marketers, but it lacks overarching structure or principles that could be utilized by aspiring marketers or now knowledgeable consumers looking to defend themselves。 Other books also do a better job of speaking of these psychological and behavioral flaws。 The book is lacks any coherent point, structure, or thesis。 It is a bombardment of examples ad nauseum of a few simple points。 Do we need more proof that a single chapter to capture all the lessons this book has to offer? Perhaps, the various examples are interesting or at least memorable enough to be useful。 But it is some combination of annoying, boring, and pointless to hear about different variations of the ultimatum game in so many of the chapters。 A review by Daniel Kahneman calls the book "Instructive and entertaining。 It will leave you amused, smarter, and wondering what money and prices really mean。" Perhaps this is an example of two economists scratching each others back [Poundstone speaks highly of Kahneman in the book and perhaps they are friends] But the review was highly misleading。 This book did not leave me amused, smarter, more knowledgeable or curious about the nature of money and prices。 The dive into behavioral experiments was to shallow to dig into the deeper questions, but by no means is easily digestible for a layman's audience。 The tag-line of this book "Discover the hidden secrets of pricing and how to use them to your advantage"。 Perhaps this book did indeed, reveal some quirky marketing tricks that retailers use to trick consumers。 But, it doesn't really act as a guide to those hoping to 'use them to your advantage' or really explain how consumers could protect themselves。 In that way, the book ends up being highly unactionable and lacks significant to most potential readers。 。。。more

Amey

too many a lessons and concepts in the book。。。 not worth reading casually as I did。 Would have been a worthy read if I had highlighted stuff and made short notes of each chapter。

Olga Dmitrishina

Керуючі власною справою, знаю, що з цінами варто бути обережним。⠀Досвід показує, що міняючи цифри, можна змінити попит на послугу。 А іноді, як не дивно, підвищення ціни, яке є значущим для компанії, зовсім непомітне для клієнта。 Коротше, варто з цим розбиратись, якщо ви займаєтесь бізнесом。⠀Вільям Паундстоун «9,99。 Міф про чесну ціну»Якщо коротко, книга про те, що поняття «дорого» не існує。 Наше сприйняття залежить від досвіду та обставин。⠀Автор розповість, як з‘явились ціни з девяткою наприкінц Керуючі власною справою, знаю, що з цінами варто бути обережним。⠀Досвід показує, що міняючи цифри, можна змінити попит на послугу。 А іноді, як не дивно, підвищення ціни, яке є значущим для компанії, зовсім непомітне для клієнта。 Коротше, варто з цим розбиратись, якщо ви займаєтесь бізнесом。⠀Вільям Паундстоун «9,99。 Міф про чесну ціну»Якщо коротко, книга про те, що поняття «дорого» не існує。 Наше сприйняття залежить від досвіду та обставин。⠀Автор розповість, як з‘явились ціни з девяткою наприкінці, що таке «якорі» та як впливає на нашу свідомість «принцип контрасту»。⠀Книга, скоріш психологічна, ніж маркетингова。 Вона про наше неусвідомлене сприйняття цифр, про те, що ціна - річ суб’єктивна。⠀Хтось знайде у книжці способи маніпулювання жадібністю, а хтось побачить шляхи уникнення маніпуляцій。⠀ 。。。more

Von_feng

万变不离其宗:锚定和对比效应。其它则是其变形。

Keane Kwa

The more valuable lessons can only be found in the 2nd part of the book and the book is a bit repetitive (too many examples to illustrate the same points) However, still an interesting read if you are able to last to the 2nd half of the book。

Courtney

It was fine, but it was a lot different than what I was expecting。 I didn't like the format, and it seemed to get off topic so often that I found myself wondering "where is this going?"。 It was fine, but it was a lot different than what I was expecting。 I didn't like the format, and it seemed to get off topic so often that I found myself wondering "where is this going?"。 。。。more

Margarit (Mark) Ralev

Useful book for sure。No matter if you develop your own business or you are just a consumer - it's weird not to be interested how the prices all around you are formed and how much the things actually "cost" in the heads of everyone。 Useful book for sure。No matter if you develop your own business or you are just a consumer - it's weird not to be interested how the prices all around you are formed and how much the things actually "cost" in the heads of everyone。 。。。more

Terry Koressel

Priceless was not priceless。。。but, absolutely, it is an outstanding book on the psychology of pricing。 With pricing becoming a near science in some business sectors, Priceless offers an invaluable perspective。 It's main premise is that the economic view of pricing。。。。as the equilibrium between supply and demand forces。。。is lacking in that it does not take into account the human mind with its biases, its logical shortcuts, its need for comparative information and its vulnerability to manipulation Priceless was not priceless。。。but, absolutely, it is an outstanding book on the psychology of pricing。 With pricing becoming a near science in some business sectors, Priceless offers an invaluable perspective。 It's main premise is that the economic view of pricing。。。。as the equilibrium between supply and demand forces。。。is lacking in that it does not take into account the human mind with its biases, its logical shortcuts, its need for comparative information and its vulnerability to manipulation。 I laughed at some of the studies in the book because I have succumbed to many of the same pricing "schemes" in my lifetime。。。and I have been involved in establishing pricing my entire business career。 My only complaint about the book is its structure。。。。it approached the evolution of pricing knowledge more from a historical perspective rather than a science perspective。 However, I highly recommend the book to any business person involved in retail, distribution or industrial pricing。 And it is an enjoyable read on top of the excellent learning。 。。。more

Burçak Demirtaş

Real experiments and great observations about human price approaches

Patrick Stuart

This is an interesting book about price。Its written for business people。 Chapters are short and punchy with a form as regular as poetry; a set-up, investigation, explanation and then musing on meaning。"One of America's longest-running Guy Grand pranks takes place every day just off 1-40 in Amarillo。 A giant steer statue us blazoned with a sign advertising a FREE 72 OZ STEAK。"From here we descend into the Gospel of Poundstone, or more like the Torah of Poundstone as the Gospels themselves are mic This is an interesting book about price。Its written for business people。 Chapters are short and punchy with a form as regular as poetry; a set-up, investigation, explanation and then musing on meaning。"One of America's longest-running Guy Grand pranks takes place every day just off 1-40 in Amarillo。 A giant steer statue us blazoned with a sign advertising a FREE 72 OZ STEAK。"From here we descend into the Gospel of Poundstone, or more like the Torah of Poundstone as the Gospels themselves are micro stories of the lives and investigations of academics, economists, psychologists and business people investigating the nature of prices。There is a study, or a series of studies, or a 'latest study', which takes place in a lab, in the U。S。 or Israel。 These labs are like temples of logical knowledge which issue out these subtle riddles of behaviour or thought which are meant to reveal something about humanity and the way it thinks。 In one scene a guy in the U。S。 constructs a room in a building that _invisibly tilts on its axis due to hidden workings_, this is to measure if or how much people are aware of their actual balance without meaningful cues。 The room is set to lure people in with fake free eye tests and then to move around secretly and see if they notice。(People sense something is wrong, but they often don't relate it to movement。)The riddle is considered, examples are given。Some thought is dedicated to the overall meaning of the consequences should the riddle be found to be a full truth。 But only for a few paragraphs。 The chapters are short, like blog posts, magazine articles。 They are *punchy*。 Constructed like SEO-optimised trade-speak clickbait blog posts。 Artfully constructed; bit of human interest, bit of academic soap opera, bit of theory, dab of mathematics, knowing tie-up at the end。So those are the onrushing pebbles of Poundstones argument。 They never entirely or purely cohere into a directly-stated synthesis or final statement。 But it is not hard to work out his meaning。 His argument is that the prices for a lot of things are very close to being imaginary。 You probably have a rough personal intuition of how imaginary or made-up most prices are; well double that, or maybe triple it, or increase it by a factor of something。 It is all light and air, or so it would seem。Humans judge by ratio very keenly and are totally bonkers when it comes to abstract values。 If you want to change someone’s thoughts about pricing, change the ratios that are present when someone thinks about it。 Therein lies almost all of everything anyone ever did to find a way to raise a price。Humans assign value by primate-relevant qualities。 Considering Price, alone, deeply, actually brings you back into contact with the whole of the human experience, because when assigning an abstract value to something, it seems that what really matters is human context。 People draw from their entire physical and social experience of the world when negotiating with each other。In particular, people are much more loss-averse than they are success hungry, and they are much, _much_ more averse to letting someone treat them in an 'unfair' way than they are desirous of getting free, or extra, resources。So people will literally turn down a free lunch if it comes with an assumed loss of relative status or participation in a deal in which someone is seen to have an unfair advantage over them, even if in rational absolute terms they only gain by the exchange。So, 'value', though seemingly abstract, is like a puncture hole though the skin into a deeply human world of social networks, personal status, testosterone levels, fear of loss, desire to impress and just a very apelike, living, human experience of reality。Heuristics are a thing。 Humans use simple, usually ratio-based intuitive shortcuts based on environmental factors in order to work out the value of thigs。 When considered singly, isolated away from their ecology of thought and zoned-in on in a lab, all of these heuristics break down。 They are 'non-logical' and can be made to be wrong with tricks of logic。The question of how powerful this effect is in real-life is a primary moral axis of the book。 Unusually, Economists and Humanists are on the same side in this one, they both want the decisions people make to 'make sense' and to be fundamentally rational, or at least, reasonable。 Even if they break down in the lab it is hoped human decision making works 'as a whole'。Poundstone seems to be on the other side, the general drift of his argument is that prices are deeply and worryingly ethereal and much of human value-assignment is basically a holodeck episode。Takeaways;Priceless absolutely abounds in factoids, little slivers and pieces of counter-intuitive, strange or just interesting discoveries and secrets。 Here are a few;There is/was a weird culture war/intellectual war between Economists and Psychologists。 Economists seem to move in an ethereal realm of pure figures and absolute values on which the great machinery of their thought is based。 Psychologists are a bit dirty, manipulative and fluid, they chew away at the absolute values Economists need to build their palaces, revealing them to be little more than dreams。So in the partial history of the relations between Psychologists and Economists that makes up a strand of the book, Economists have a habit of just straight-out dismissing anything Psychologists say with "Oh, _psychology_)", at least for the start of the book。 So that is an interesting example of subjects or cultures deciding to just not talk to each other。 Or at least, not to listen。。。。。。。。。。。。。。。'Anchoring', shaping assumptions on price by opening with a super-high figure, works much much much better than most people intuit it does。 It works on the average Joe, and it works on experts, it works on people who decide quickly, and it works on people who consider deeply。 The depth to which you have thought about something, alone, does not meaningfully change the extent to which Anchoring will work on you。。。。。。。。。。。。。。"Fisher aspired to predict prices from supply and demand。 His thesis described how to do that, and Fisher went so far as to build a price-generating machine (see page 225)。 It was a tank of water with a flotilla of half-flooded wooden "cisterns" connected by a system of levers。 Adjustments to "stoppers" and levers fed in data on incomes, marginal utilities, and supplies; then prices could be read off scales。 Gibbs must have been pleased。 The device prefigured, if not parodied, the direction of twentieth-century economics。 ("Press stopper I and raise III," read part of Fishers instructions for the thing。 "I, II, III now represent a wealthy middle class and poor man respectively。。。")。。。。。。。。。。。。。"I absolutely thought [pay] would go down because the disclosures would be so embarrassing," recalled Graef Crystal, an architect of those disclosure rules。 "But it turned out that when somebody is hauling in $200 million, he's not embarrassable。"。。。。。。。。。。。。。"After years of work-around like half-dozen cartons of eggs and ever-shrinking containers of milk, it bit the bullet and raised its top price to $99。99。 For president Jeff Gold, it was almost like a death in the family。 'The number 99 is a magic number - deviating from that is something we absolutely are not taking lightly,' he said。 'I find significant discomfort emotionally about considering making the change。'。。。。。。。。。。。。There is much much more, its something of a wunderkammer of these, more than it is a book almost。There were layers to my response to 'Priceless'。 I often found it 'clever', in a mildly frustrating way。 The glib single-idea 'gotchas' of business writing or magazine articles。 I intuitively strongly dislike what I perceived as a mild wash of slightly sneering superiority through the opening parts of the book。Under that, its actually interesting。 The basic deal is that price, which bills itself as a firm and near-abstract unit of measurement, is a deeply human construct。 On the down side this means the world economy is largely a collective hallucination and could collapse or change hugely at any time。 On the more positive (to me) side, Economics is not just a part of the Humanities, it’s actually a Romance。 Piercing through the needle-dot of price reveals a cosmos of human emotion, human feeling and human social relationships, illogical, 'irrational', but making organic sense, not without reason or meaning and if not entirely within our control then at least within our capacity to understand。 。。。more