Priceless: The Myth of Fair Value (and How to Take Advantage of It)
Wed, Mar 3, 2010 (6:12 p.m.)
Let’s begin with a story problem:
Linda is 31 years old, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in anti-nuclear demonstrations. Which is more likely to be true?
1) Linda is a bank teller
2) Linda is a bank teller and is active in the feminist movement
Picked an answer? Then read on.
The above story problem was presented to 142 students at the University of British Columbia, and the vast majority of them got it wrong. According to William Poundstone, author of Priceless, “Eight-five [sic] percent rated the second statement more likely than the first. That’s ridiculous. The only way Linda can be a bank teller and a feminist is if she’s also a bank teller.”
Poundstone’s point is that human beings aren’t fully rational. When making judgments, we use heuristics—psychological shortcuts. According to Poundstone, we use a lot of heuristics when we pay for stuff, and Priceless explains how they factor into buying and selling. He points out that none of us have any idea how much items cost to produce, only how much we’ve paid for them in the past. So we’re easy to manipulate. Poundstone reveals how, exactly, we’re manipulated—into paying $200 for a pair of shoes, $500 for a skirt, $2,000 for a watch.
- Priceless: The Myth of Fair Value (and How to Take Advantage of It)
- William Poundstone. Hill and Wang, $25.99
Priceless is filled with interesting anecdotes and studies, like that of Linda the Bank Teller, only I’ve seen most of Poundstone’s anecdotes and studies before. I’ve already read about Linda in Nudge, The Drunkards’s Walk, The Science of Fear and The Canon. Those commercial nonfiction books were all published in the past few years.
But Poundstone doesn’t just write about studies, he writes about the studiers. And while his descriptions of them are clever (e.g., “Between the trick haircut and the tight smile that might be a frown, Allais’ face evoked one of those odd pictures that becomes a different face when turned upside down”), I wish he’d keep the focus on the research. I can only keep track of so many academics.
If Poundstone had connected everything up in the end—the anecdotes, the studies and the studiers—and if he used these connections to form some central thesis, I’d cut him some slack. But he failed to do this. To me, the book felt as disjointed as it was familiar.
Priceless retails for $25.99, but it’s only worth 10 bucks.