16. Priceless by William Poundstone

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16. Priceless by William Poundstone

Post  wmeisel on Fri Aug 13, 2010 1:55 am

The subtitle (lots of subtitles in books lately) is "The myth of fair value and how to take advantage of it".

Poundstone has written a bunch of really good books, and this one is no different. In it, he looks at some basic concepts that relate to how things are priced. In particular, we are all subject to anchoring. If a (possibly irrelevant) number is in our consciousness when we are making a purchasing decision, it can affect the amount of money we will pay, even when we think that the number is irrelevant, and even when we think the number is having no effect. This is shown in example after example in this book. There is some advice about how to use this concept in negotiating salaries.

The book is filled with many interesting examples. How did the lawyer manage to get such a large jury prize award in the famous McDonald's coffee case? How do the concepts discussed in the book affect what menus look like in restaurants? Are you getting screwed based on what text messaging should really cost?

This is recommended, though I admit I skipped a few chapters in the middle of it. But part four, consisting of a bunch of relatively short chapters is great reading.

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