price anchoring

I've been reading Priceless recently, by William Poundstone (or something) and jeez is that book bad at things. As a psychologist i have to say that i know pretty much everything it mentions, as a normal person i have to say the book is balls hard to understand and terrible at conveying concepts to laypeople when the concepts are hard and spend too much time on it when the concepts are easy. Well, i'm still reading it, so if you're going to get it for free you might as well give it a flip through - it's told in many many short chapters so you won't get bored.

One of the concepts in Priceless is Price Anchoring, which can be thought of as a fun thing stores do when they put up an expensive item in the window and then relative inexpensive items next to it. Think of a luxury store, with a $8000 handbag on display and some $2000 handbags nearby. The $2000 handbags are only a little lower quality than the $8000 one. Well, they don't expect to sell the $8000 one, maybe ever, but they're putting it there so you think the $2000 one is a bargain.

Okay, maybe you'll never buy a $2000 handbag, but what about this? A gift store is selling things in the $40-$60 range. .. a bit too much for you. But all of a sudden that $7 keychain is looking pretty good.

You've been sent out to buy milk, but you have no idea what milk is supposed to cost anymore. There's a sketchy store brand for $2.39 and a popular brand out for $2.69 and a possibly organic one for sale at $2.99. Well, better go for one in the middle! Stores know you think like this. When they make cheap store brand milk, they don't expect you to buy it, they just want to drive up sales for the other two. Also, you just paid $7 for a keychain and felt like it was a bargain, didn't you?

What i thought was really interesting was that someone in the book called the handbag example "anger-happy reaction" or something. People are angry they can't afford the $8000 celebrity handbag, so they try to make themselves happy by buying the $2000 one. Hey, it's still brand name isn't it? And i saved $6000 here!

"look this one is only $160! Isn't that amazing?"
"Hey Lily what's Breloom's base attack?"
".. uhm, 130 or 135 or something?"
"Isn't that really good?"
"Yeah it's awesome"
"What pokemon has 160 attack?"
".... Slaking and Regigigas?"
"Pretty awesome huh?"
"But they're too slow"
"...You still going to get that handbag?"
"Guess not."

POKEFANS HAVE RESISTANCE TO PRICE ANCHORING - get around it by re-anchoring. DO YOUR BEST, FRIENDS!


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