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

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). Poundstone illustrates these effects, and the process by which their importance was recognized first in the literature and then in consumer practice, through a long series of vignettes that recapitulate the genesis and development of pricing theory, behavioral economics, and psychological decision theory. So as it issue (1), Poundstone would probably argue that many of the reasons people give to support $9.99 as being more "fair" than $14.00 are illusory - that pricing is far more fluid and idiosyncratic than most people appreciate.As to (2), Poundstone might argue that Macmillan is worried about the contrast effect. Macmillan would be concerned that even to a person who does not have nor intend ever to acquire a Kindle, the proximity of the $9.99 would make its hardback price of say $18.00 seem higher than it actually was to a consumer. So this book lends support to Macmillan's position as to issue (2).Now, let me briefly get to the meat of the book.The book is structured along the lines of that distinctive modern subgenre of popular economics books in which anecdote and biography are interwoven and are equal partners with theory and experiment. Careful measurements by colorful character, in the stories of these works, gradually overturns entrenched orthodoxy, first in a small-scale and then in the large. Popular exponents of this style include Malcolm Gladwell, whose Tipping Point, Blink, and What the Dog Saw are canonical examples; Michael Lewis, whose Money Ball described the impact of statistics on baseball; Thomas Bass, whose Eudaemonic Pie and The Predictors foreshadowed the more modern style and which treated the impact of statistics and nonlinear modelling (chaos theory) respectively; Sam Savage, whose Flaw of Averages is a good introduction to statistics in this style; and of course Steven Levitt with his Freakonomics series.This book is a worthy and interesting addition to the genre. Of the many interesting anecdotes, my favorite was probably Eskildsen and the World Trade Center, and how Las Vegas turned out to play a major role in the development of psychology. The cast of characters, including ex-Israeli soldiers among others, was very entertaining. And the theory, although of course subject to some carping (no confidence factors in many of the studies reported, for example) highlighted the key points clearly and gave the reader clear paths for further knowledge.Thus, I would recommend this book as a good introduction not only to pricing but also to behavioral economics and human decision-making generally.

This book don't offer a standard pricing schema that you can use in your business because there is None.The book is a great introduction to the factors that MAY controls customer's interpretations of the price tag on a product or a service. but you will need to following your reading with other books discussing and explaining psychology in general and the behavioral economics specifically.the Author has gone through many theories and explained them very well through the book and listed many examples that mentioned and explained subjects behaviors.

I found the book to be well written, entertaining enough that i finished its 336pp in three evenings of enjoyable reading. I read some of the other less than stellar reviews and would wholeheartedly disagree with those critics on the value of this book. It simply proposes to tell one of how marketers use various gimmicks to control prices, and some of these are in subliminal manners. I was never under the guise that this book was meant to be considered a course in price theory, which would be a junior level course in a pursuit of a bachelors degree with a major in economics, but some readers might have thought that reading this one book would prepare them to challenge Greenspan or Summers on economic theory. 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 meant to be an all encompassing erudite study in economics. If you want to read a very entertaining book on how many large marketers decide to set what they consider to be their optimal prices for their various products then add this book to your reading list. If you want to become an economic expert, I would suggest enrolling in an institution of higher learning and expecting to take four years of concentrated study in that area before you even think of grad school. I liked this book enough that I bought additional copies for each of my kids, so that should say how much I liked it.

There is nothing pretentious about Mr Poundstone and the information he presents in this book that attempts (successfully in my view) to outline the huge marketing machine - tricks of the trade and how we are all sucked in to some degree by the bombardment we are subjected to on a daily basis.Most of it is quite meticulously described and he claims little personal credit (while lauding others) for any of the solid research and solid evidence to support his claims.The nutty thing is that this book, if absorbed in nibbles, will ring all your bells. Basically WE ALREADY ALL KNOW what Mr. Poundstone has to say. What we do not do is allow most of this knowledge into our fore-brain - and this is unashamedly the purpose of this book.Apart from the "I know this" shocks that will accompany many readers progress through this well written tomb, there are many informative examples of just how readily influenced most of our 'apparently logical deductions and choices are by wholly subjective and/or random previous suggestion and events.To read this book - and understand its contents - is a solid beginning to gaining a "freedom..." you did not even know you were missing.It is effectively a scientific endorsement of what you already know but also many insights you may find helpful by way of defending yourself against both the ruthless and subtle provocateur.A great book to add to your "periodic reference" shelf.

if you like William Poundstone's other books or behavioural finance books, you will enjoy. if you're looking for a book with lots of pictures, prob not the right one for you.

The book was sent in a great condition by the seller. the book itself is a very interesting read on how we perceive prices and how pricing really works for products. Highly recommend this book

Although it takes some effort to read it and some brain action to process, I've found some brilliant ideas. The book is full of psychological experiments with often unexpected results.I would use the knowledge in business and personal life. Great read for those interested in prices/money/people.

Vor mehr als einem Jahrhundert hat Oscar Wilde herausgefunden, dass die Leute den Preis von allem kennen, aber den Wert von nichts. William Poundstone hat dies in seinem Buch Priceless an 57 Beispielen erläutert und bewiesen. In der Tat ist ein "Preis" nichts Absolutes. Jeder Preis kann nur aus Sicht jedes einzelnen Menschen bewertet werden. Für die einen ist der Preis hoch, für den anderen lächerlich niedrig und für den Dritten genau richtig.Die Mehrzahl derjenigen, die Preise gestalten, gehen fälschlicherweise von einem Menschenbild aus, das nicht existiert, nämlich dem "Homo Oeconomicus", der alle seine Entscheidungen mit ökonomischem Kalkül trifft. Die Wissenschaft hat mittlerweile unzählige Beweise erbracht, dass dem nicht so ist, dass der Mensch ein hochemotionales Wesen ist, das im Grunde genommen gar nicht in der Lage ist hochökonomische Entscheidungen zu treffen.Poundstone zeigt in beeindruckender Weise die Fehlerhäufigkeit von Menschen bei Entscheidungen, die mit dem Preis zu tun haben. 2007 haben z. B. die Wissenschaftler Keith Jensen, Josep Call und Michael Tomasello herausgefunden, dass Schimpansen rationaler handeln als Menschen! Wie Preise zu bewerten sind hängt von extrem vielen Faktoren ab: vom Geschlecht, von der Vermögenssituation, von der Dringlichkeit des Bedarfs, von der Rasse, vom Alter, vom Beruf, vom Hormonhaushalt, von Kontrasten, von der Darbietung von Angeboten usw..Sehr interessant sind die sogenannten Ankereffekte. Dass Menschen durch Informationen vor und bei einer Entscheidung massiv beeinflusst werden, ist wissenschaftlich erwiesen. Wenn man z. B. zwei Gruppen von Menschen nach Zufall bildet und jeder Gruppe eine andere Information vorab gibt, dann treffen diese beiden Gruppen bei der exakt selben Frage sehr unterschiedliche Antworten.Das Buch enthält so viele interessante Erkenntnisse und ist vor allem für Menschen von höchster Relevanz, die Preise bilden und Preisentscheidungen zu treffen haben.

Bom material. Vale cada centavo. Recomendo para estudantes de behavioral finance. Interessante. Bom resumo de experimentos importantes sobre decisão sobre incerteza.