Summary

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• Consumers don't generally know what anything should cost, they are mainly sensitive to relative differences.
• Price is not an absolute number, it can evoke a complex set of emotions and depending on the context, the same price may be perceived differently.
• Judgments of monetary value have much in common with sensory judgments like weight, brightness, or intensity of odors.
• Prices are influenced by the environment and other numbers recently considered.
• Price decisions usually have a strong intuitive component, a price is not an answer to a math problem, it's an expression of desire or a guess about what other human beings will do.
• Prices are constructed and not revealed, to name a price is to build a valuation.
• The value of money is relativistic and depends on the context.
• Losing money hurts more than gaining the same amount delights.
• Prices are influenced by the subjective difference between certain and probable outcomes.
• The outcomes of ultimatum and dictator games have less to do with altruism than with manners and social norms of fair play.
• A person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise.

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Notes

Part One “The more you ask for, the more you get” (Location 87)

One The $2.9 Million Cup of Coffee (Location 89)

Skippy peanut butter recently redesigned its plastic jar. “The jar used to have a smooth bottom,” explained Frank Luby, a price consultant with Simon-Kucher & Partners in Cambridge, Massachusetts. “It now has an indentation, which takes a couple of ounces of peanut butter out of the product.” The old jar contained 18 ounces; the new one has 16.3. The reason, of course, is so that Skippy can charge the same price. (Location 119)

That dimple at the bottom of the peanut butter jar has much to do with a new theory of pricing, one known in the psychology literature as coherent arbitrariness. This says that consumers really don’t know what anything should cost. (Location 122)

Buyers are mainly sensitive to relative differences, not absolute prices. (Location 125)

In summer 2008 Kellogg’s phased in thinner boxes of Cocoa Krispies, Froot Loops, Corn Pops, Apple Jacks, and Honey Smacks cereals. No one noticed. Shoppers just see the box’s width and height on the shelf; by the time they reach for the box, the decision has been made and they’re thinking of something else. (Location 131)

Though a price is just a number, it can evoke a complex set of emotions—something now visible in brain scans. Depending on the context, the same price may be perceived as a bargain or a rip-off; or it may not matter at all. (Location 161)

Two Price Cluelessness (Location 166)