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Priceless: The Myth of Fair Value (And How to Take Advantage of It) by William Poundstone
availability heuristic, Cass Sunstein, collective bargaining, Daniel Kahneman / Amos Tversky, delayed gratification, Donald Trump, East Village, en.wikipedia.org, endowment effect, equal pay for equal work, experimental economics, experimental subject, feminist movement, game design, German hyperinflation, Henri Poincaré, high net worth, index card, invisible hand, John von Neumann, Kenneth Arrow, laissez-faire capitalism, Landlord’s Game, loss aversion, market bubble, mental accounting, meta analysis, meta-analysis, Nash equilibrium, new economy, Paul Samuelson, payday loans, Philip Mirowski, Potemkin village, price anchoring, price discrimination, psychological pricing, Ralph Waldo Emerson, RAND corporation, random walk, RFID, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, rolodex, social intelligence, starchitect, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, ultimatum game, working poor
The colorful mix of pricing elements in mobile telephony—which range from one-off installation charges to monthly fees to per minute charges (peak, off-peak, weekend) to billing intervals (full minutes, 10 seconds), etc.—shows how many degrees of freedom such a complex pricing challenge can present. With complex billing plans, it is difficult to comparison shop (every plan is different) and nearly impossible to predict what a plan will cost. Choosing a phone plan becomes a judgment under uncertainty, mediated by loss aversion and heuristics. One of the most powerful tools of psychological pricing is the flat-rate bias. Consumers like flat rates, even when they cost more. A 2009 study by the Utility Consumers’ Action Network claimed that cell phone users in the San Diego area paid an average of $3.02 a minute for calls. That’s the price when you divide the aggregate amount paid by the number of minutes used. The per-minute tab is surprisingly large because many customers who don’t talk much nevertheless choose flat-rate plans.
In 2008 Taco Bell president Greg Creed wrote an open letter to rapper 50 Cent, asking him to change his name to “79 Cent,” “89 Cent,” or “99 Cent” to promote the chain’s low prices. The rapper responded with a lawsuit for the uncharming figure of $4 million—resulting in ample free publicity for both parties. A Macy’s ad from the November 2, 1890, New York Times. About 60 percent of the prices end in 9. Charm prices inaugurated the study of psychological pricing. In 1936 Columbia University’s Eli Ginzberg published a one-page note on what he called “customary prices.” “For many years, retail prices in this country have been quoted at one or two cents below the decimal unit—$.49, $.79, $.98, $1.49, $1.98, tell the tale.” Ginzberg reported on the informal experiment of an unnamed large retailer. The firm was curious enough to print multiple versions of its catalog, some with the already customary 9-ending prices and others with the corresponding round amounts.
He realized full well that a repetition of the experiment might . . . permit more definite conclusions.” With money on the line, “the experimental zeal, even of a daring business man, was . . . held in check.” For nearly half a century, much informed opinion held that charm prices were a harmless superstition. This didn’t keep retailers from using them. By the 1980s, the Kahneman-Tversky revolution had revived interest in psychological pricing. In eight studies published from 1987 to 2004, charm prices were reported to boost sales by an average of 24 percent relative to nearby prices. Don’t take that quotable figure too seriously. The increase in sales varied from insignificant to over 80 percent. Take an experiment done by Eric Anderson of the University of Chicago and Duncan Simester of MIT. They found a mail order house willing to print up different versions of its catalog.
Mistakes Were Made (But Not by Me): Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts by Carol Tavris, Elliot Aronson
Ayatollah Khomeini, cognitive dissonance, cuban missile crisis, desegregation, Donald Trump, false memory syndrome, fear of failure, Lao Tzu, longitudinal study, medical malpractice, medical residency, meta analysis, meta-analysis, Milgram experiment, moral panic, Nelson Mandela, placebo effect, psychological pricing, Richard Feynman, Ronald Reagan, social intelligence, telemarketer, the scientific method, trade route, transcontinental railway, Watson beat the top human players on Jeopardy!
If the woman who believes she is unlovable meets a terrific guy who starts pursuing her seriously, she will feel momentarily pleased, but that pleasure is likely to be tarnished by a rush of dissonance: "What does he see in me?" Her resolution is unlikely to be "How nice; I must be more appealing than I thought I was." More likely, it will be "As soon as he discovers the real me, he'll dump me." She will pay a high psychological price to have that consonance restored. Indeed, several experiments find that most people who have low self-esteem or a low estimate of their abilities do feel uncomfortable with their dissonant successes and dismiss them as accidents or anomalies.23 This is why they seem so stubborn to friends and family members who try to cheer them up. "Look, you just won the Pulitzer Prize for literature! Doesn't that mean you're good?"
No, they didn't, and that is why Amos Oz is wrong. Oz didn't reckon with the power of self-justification: We are good people. Therefore, if we deliberately inflict pain on another, the other must have deserved it. Therefore, we are not doing evil, quite the contrary. We are doing good. The relatively small percentage of people who cannot or will not reduce dissonance this way pay a large psychological price in guilt, anguish, anxiety, nightmares, and sleepless nights. The pain of living with horrors they have committed, but cannot morally accept, would be searing, which is why most people will reach for any justification available to assuage the dissonance. In the previous chapter, we saw on a smaller scale why many divorcing couples justify the hurt they inflict on each other. In the horrifying calculus of self-deception, the greater the pain we inflict on others, the greater the need to justify it to maintain our feelings of decency and self-worth.
Home Game: An Accidental Guide to Fatherhood by Michael Lewis
“Your mother did all the dirty work.” This wasn’t entirely true, but it’d pass cleanly through any polygraph. For the tedious and messy bits of my childhood my father was, like most fathers of his generation, absent. (News of my birth he received by telegram.) In theory, his tendency to appear only when we didn’t really need him should have left a lingering emotional distance; he should have paid some terrible psychological price for his refusal to suffer. But the stone cold fact is his children still love him, just as much as they love their mother. They don’t hold it against him that he never addressed their diaper rash, or fixed their lunches, or rehearsed the lyrics to “I’m a Jolly Old Snowman.” They don’t even remember! My mother did all the dirty work, and without receiving an ounce of extra emotional credit for it.
The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management by Alexander Elder
additive manufacturing, Atul Gawande, backtesting, Benoit Mandelbrot, buy and hold, buy low sell high, Checklist Manifesto, computerized trading, deliberate practice, diversification, Elliott wave, endowment effect, loss aversion, mandelbrot fractal, margin call, offshore financial centre, paper trading, Ponzi scheme, price stability, psychological pricing, quantitative easing, random walk, risk tolerance, short selling, South Sea Bubble, systematic trading, The Wisdom of Crowds, transaction costs, transfer pricing, traveling salesman, tulip mania, zero-sum game
Each day's volume is added or subtracted, depending on whether prices close higher or lower than on the previous day. When a stock closes higher, it shows that bulls won the day's battle; that day's volume is added to OBV. When a stock closes lower, it shows that bears won the day, and that day's volume is subtracted from OBV. If prices close unchanged, OBV stays unchanged. On-Balance Volume often rises or falls before prices, acting as a leading indicator. Crowd Psychology Prices represent the consensus of value, but volume represents the emotions of market participants. It reflects the intensity of traders' financial and emotional commitments, as well as pain among losers, which is what OBV helps to track. A new high of OBV shows that bulls are powerful, bears are hurting, and prices are likely to rise. A new low of OBV shows that bears are powerful, bulls are hurting, and prices are likely to fall.
See also Downtrends; Uptrends advisors' following of and conflicting timeframes of markets created by crowds deciding to trade or wait defined effect of support or resistance on and factor of five in futures markets at hard right edge health of identifying on long-term charts moving averages indicating NH-NL and objective signals for trades and oscillator levels psychology of emotions in and mass psychology price shocks rallies and declines and social psychology and Stochastic signals time spent in trading ranges vs. timing of trades and and volume of trading Trend-following indicators Directional system MACD Lines in Triple Screen trading system Trendlines: diagonal subjectivity of TRIN Triple bullish or bearish divergences Triple Screen trading system choosing timeframes in day-trading entry technique screen Force Index in market tide screen market wave screen objective of Stochastic signals in stops and profit targets in trend-following indicators and oscillators True breakouts True Range (TR) Tulip Mania 12-step programs Twelve Steps and Twelve Traditions (AA) 20-day New High–New Low Index 2% Rule in futures markets as a guideline for pyramiding for institutional traders and Iron Triangle of risk control Two Roads Diverged: Trading Divergences (Alexander Elder) Tyson, Mike U Uncertainty Undecided traders Undercapitalization myth U.S. stock market: price cycles in trends in Unstuff Your Life (Andrew J.
The Paradox of Choice: Why More Is Less by Barry Schwartz
accounting loophole / creative accounting, attribution theory, Atul Gawande, availability heuristic, Cass Sunstein, Daniel Kahneman / Amos Tversky, endowment effect, framing effect, hedonic treadmill, income per capita, job satisfaction, loss aversion, medical residency, mental accounting, Own Your Own Home, Pareto efficiency, positional goods, price anchoring, psychological pricing, RAND corporation, Richard Thaler, science of happiness, The Wealth of Nations by Adam Smith
What emerged from the findings was that, while participants valued being able to reverse their choices, almost no one actually did so. However, those who had the option to change their minds were less satisfied with their choices than participants who did not have that option. And, perhaps most important, the participants had no idea that keeping the option open to change their minds would affect their satisfaction with the things they chose. So keeping options open seems to extract a psychological price. When we can change our minds, apparently we do less psychological work to justify the decision we’ve made, reinforcing the chosen alternative and disparaging the rejected ones. Perhaps we do less work putting opportunity costs of the rejected alternatives out of our minds. After all, if you put down a nonrefundable deposit for a house on Martha’s Vineyard, you focus on the beauty of the beach and the dunes.
Social Class in the 21st Century by Mike Savage
call centre, Capital in the Twenty-First Century by Thomas Piketty, Clapham omnibus, Corn Laws, deindustrialization, deskilling, Downton Abbey, financial independence, gender pay gap, Gini coefficient, income inequality, liberal capitalism, Mark Zuckerberg, megacity, moral panic, New Urbanism, Occupy movement, old-boy network, precariat, psychological pricing, Sloane Ranger, The Spirit Level, unpaid internship, upwardly mobile, very high income, winner-take-all economy, young professional
The self-reported class identities often showed a complex set of affinities informed as much by origin as by destination. Many expressed a sense of being caught between two worlds, constantly juggling contradictory sources of identity. Thus, while the contemporary experience of upward mobility in Britain may involve indisputable gains in economic capital and social status, it is important to consider that such benefits can often come with a considerable psychological price tag. Michael Young’s satire on ‘the rise of the meritocracy’ focused mainly on the power of the school system to differentiate children on the basis of their IQs and said little about the significance of universities in affecting future careers. He wrote at a time when only 5 per cent of children went to universities. However, in the years since, the university system has expanded dramatically, and in this chapter we will show how universities play a key role in affecting social mobility, especially at the top levels.
Early Retirement Extreme by Jacob Lund Fisker
8-hour work day, active transport: walking or cycling, barriers to entry, buy and hold, clean water, Community Supported Agriculture, delayed gratification, discounted cash flows, diversification, dogs of the Dow, don't be evil, dumpster diving, financial independence, game design, index fund, invention of the steam engine, inventory management, lateral thinking, loose coupling, market bubble, McMansion, passive income, peak oil, place-making, Ponzi scheme, psychological pricing, the scientific method, time value of money, transaction costs, wage slave, working poor
Handing over responsibility for one's savings does not make sense, especially for anyone whose investment income is comparable to one's expenses or worse, one's job income.31 Such a person is not just an employee, but an asset manager as well. This person would pay a steep price32 by outsourcing this to professionals without at least understanding the basics of money management himself. In fact, outsourcing is a financial decision that should not be made blindly. Economic goals for someone aspiring to be a Renaissance man are to understand the difference between price and value. Value is psychological; price is determined by the market. learn to consider more than the immediate consequences of a choice. Also consider the future consequences--for example, opportunity cost and the time-value of money. Learn to see the unseen. learn to consider more than the consequences of a choice for just one group of people, but for all others as well. realize that economic agents all represent special interests that typically interpret the situation according to their own interests or political views.
Understanding Sponsored Search: Core Elements of Keyword Advertising by Jim Jansen
AltaVista, barriers to entry, Black Swan, bounce rate, business intelligence, butterfly effect, call centre, Claude Shannon: information theory, complexity theory, correlation does not imply causation, en.wikipedia.org, first-price auction, information asymmetry, information retrieval, intangible asset, inventory management, life extension, linear programming, longitudinal study, megacity, Nash equilibrium, Network effects, PageRank, place-making, price mechanism, psychological pricing, random walk, Schrödinger's Cat, sealed-bid auction, search engine result page, second-price auction, second-price sealed-bid, sentiment analysis, social web, software as a service, stochastic process, telemarketer, the market place, The Present Situation in Quantum Mechanics, the scientific method, The Wisdom of Crowds, Vickrey auction, Vilfredo Pareto, yield management
Prestige price is the practice of charging higher prices for goods or services to give the impression to the consumer that there is added value for the cost. Prestige pricing capitalizes on people’s notions that correlate price with quality. So, a high-priced product is viewed superior in quality to a similar product priced for significantly less. Fractional pricing is the practice of costing products in odd prices or a little less than a higher round number (e.g., $9.99, $19.99, $7.97, etc.). Fractional pricing is based on the psychological pricing theory that consumers ignore the last digit and do not properly round up. Promotion.â•‡ Promotion includes all the channels and media used by a business to communicate to customers about its products or services. Promotion is how a business markets and sells products or services. Naturally, a business must balance communicating effectively while also being cost efficient. Promotion is tied significantly with sponsored search, as ad copywriters can often increase the response rate from sponsored search ads by simply changing the headline on an advertisement .
Sam Friedman and Daniel Laurison by The Class Ceiling Why it Pays to be Privileged (2019, Policy Press)
affirmative action, Boris Johnson, discrete time, Donald Trump, Downton Abbey, equal pay for equal work, gender pay gap, gig economy, Gini coefficient, glass ceiling, Hyperloop, if you build it, they will come, income inequality, invisible hand, job satisfaction, knowledge economy, longitudinal study, meta analysis, meta-analysis, nudge unit, old-boy network, performance metric, psychological pricing, school choice, Skype, starchitect, The Spirit Level, unpaid internship, upwardly mobile
Instead, selfelimination is inextricably linked to the barriers erected on the demand side; it is a reaction to, or an anticipation of, many of the issues explored so far in this book. The issue of self-elimination also highlights, more broadly, the profound emotional imprint that goes hand-in-hand with upward social mobility. While this impact is sometimes worn 173 The Class Ceiling lightly, as a reminder of how far one has come or what they have achieved, for the majority we interviewed ‘success’ came at a considerable psychological price. Upward journeys, we found, had often been difficult, uncomfortable, painful even. These emotional costs, we contend, are very important to understand. Not only do they constitute hidden injuries7 that may explain why some prefer not to reach for the top, but they also reveal the limits of the current political fetish for social mobility. Opting out (‘I don’t belong there’) Across our case studies there were many instances where socially mobile interviewees had rejected, ignored or avoided clear-cut opportunities.
Libertarian Idea by Jan Narveson
(Forbidding x by law also doesn‟t make x impossible, of course; that comes under the heading of coercion.) At some point a tax becomes confiscatory or prohibitive, and few would deny that it then constitutes a genuine infringement of freedom. But before that point, what do we say? An important special case is that of moral pressure. Suppose I am a friend of yours and you know that I won‟t like it if you do x. This doesn‟t keep you from doing x at all, but it increases, as it were, the psychological price of doing it. Libertarians have a real problem here, for on the one hand they want to say that an individual has freedom of conscience (itself a vexed area); yet on the other, they can‟t easily say that we may blame anyone we please for just anything. If Jones has a perfect right to do x, can we blame Jones for doing x? If we do, are we not denying in some way or to some degree his freedom to do x?
The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order by Benn Steil
activist fund / activist shareholder / activist investor, Albert Einstein, Asian financial crisis, banks create money, Bretton Woods, British Empire, business cycle, capital controls, Charles Lindbergh, currency manipulation / currency intervention, currency peg, deindustrialization, European colonialism, facts on the ground, fiat currency, financial independence, floating exchange rates, full employment, global reserve currency, imperial preference, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, lateral thinking, margin call, means of production, money: store of value / unit of account / medium of exchange, Monroe Doctrine, New Journalism, open economy, Paul Samuelson, Potemkin village, price mechanism, price stability, psychological pricing, reserve currency, road to serfdom, seigniorage, South China Sea, special drawing rights, The Great Moderation, the market place, trade liberalization, Works Progress Administration
Keynes frequently compounded the problems of the bad hands he was dealt by playing them inaptly. An astute, dedicated career diplomat would have played off the New York bankers, who were dangling loans in return for British opposition to the U.S. Treasury’s monetary reform plans, against FDR’s moneymen. But Keynes had a legacy to think of, and his place in the Bretton Woods pantheon was critical to it. The psychological price he paid for his persistence was bouts of a Stockholm syndrome variant, whereby he would persuade himself—and, with his unmatched rhetorical skills, the political class in London—that the American government, for all its intolerable legalism and defiance of reason, truly meant well and would do the right thing by Britain in the end. The chief barrier to Keynes’s blueprint for the postwar monetary order was, at the time of Bretton Woods, still a little-known U.S.