[ExI] Eliot Spitzer and the Price-Placebo Effect

[Lee Corbin]

BillK writes

> Currently No.5 in the New York Times Hardcover Nonfiction Best Seller List.
> 
> See: <http://www.predictablyirrational.com/?page_id=6>
> 
> Do you know why we still have a headache after taking a five-cent
> aspirin, but why that same headache vanishes when the aspirin costs 50
> cents?

I guess I understand.  Although for many of us, we don't remember
the price of the aspirins we take, and they work just as well whatever
price we really paid.

> Do you know why we sometimes find ourselves excitedly buying things we
> don't really need?

Sometimes I wonder just what part of Amazon's bottom line each year
is due just to *my* own "excitedly buying things" I don't really need :-)

> According to Ariely, our understanding of economics, now based on the
> assumption of a rational subject, should, in fact, be based on our
> systematic, unsurprising irrationality.

Now isn't that going a bit far?  For centuries and centuries, marketers
have known that price means a whole lot, but that packaging, salesmanship,
and other subtle effects also exist.  Example:  my grandfather ran a very
small store.  He kept it well lit and swept the floor because he really believed
that it encouraged customers to buy more of his products, (e.g. re-visit the
store).

"Based on our systematic, unsurprising irrationality"?  Surely a vast,
vast overstatement.

> Ariely argues that greater understanding of previously ignored or
> misunderstood forces (emotions, relativity and social norms) that
> influence our economic behavior brings a variety of opportunities
> for reexamining individual motivation and consumer choice, as well
> as economic and educational policy.

Makes sense.  Greater understanding is good---and there can
always be higher profit as well as higher customer satisfaction
obtaining as a result too.

Lee