Book Review: Priceless

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.

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