FOOLING CONSUMERS.

FOOLING CONSUMERS.Elizabeth Kolbert has a review in the February 25 New Yorker of PREDICTABLY IRRATIONAL: THE HIDDEN FORCES THAT SHAPE OUR DECISIONS by Dan Ariely. The book serves as an interesting introduction to the findings of behavioral economics. One experiment showed that decisions by consumers can be influenced by being exposed to random numbers. The higher the random number, the more the subject is willing to pay. The effect is called “anchoring”: a consumer is more likely to pay a high price if there are high prices in the vicinity. Jonathan Clements in the Wall Street Journal for February 27 had more findings which might be of use in selling your car or your house. For example, a precise price is more likely to be taken as a bargain price. A round number indicates a willingness to negotiate; and if you later reduce your price, a discount will be perceived as larger if the round number makes the discount easier to calculate.