I work as a financial planner and I’ve always been fascinated by how people make decisions, particularly when it comes to money. In “Priceless”, William Poundstone provides a lot of information on how people are influenced to make decisions.
He outlines a whole range of psychological experiments that have been done that show how people can be strongly influenced by factors that you’d think they shouldn’t be influenced by.
He talks about the process of anchoring, where retailers show a high ‘standard’ price for an item in order to make the ‘sale’ price seem like it’s exceptional value.
Much of the concepts he talks about are found in the internet marketing world. As I read the book I could picture examples of the principles he talked about.
I love reading about some of the experiments, and I found myself having to re-read some of the examples to fully understand why my way of thinking was wrong (like most of the people in the experiments).
If you run any type of business (online or offline) that involves selling a product or service, this book will give you some great ideas. It’ll also help you as a consumer – you’ll be shocked by some of the things you learn.
I’ve recently read Influence by Robert B Cialdini, and the two books cover similar ground, but in different ways. Priceless provides an excellent summary of behavioral decision theory (sounds impressive, doesn’t it?) based on the research of Daniel Kahneman and Amos Tversky.
You’ll learn why having twice as much money probably won’t make you twice as happy, and why placing an expensive handbag next to an even more expensive handbag makes it look like it’s good value.
This is the kind of book that provides lots of examples and questions that you can test out on your friends. Some of the experiments they quote are quote funny to read about, but provide a fascinating insight into how our brains work.
This is one of the best books I’ve read this year, and I’ve found it to be full of practical information. I’m reading it again just so I don’t forget some of the main messages.
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