Taking these two concepts together then suggests that people refer to an initial impression of pricing to form a basis of comparison for future purchases. Further, an “arbitrary” initial list price becomes “coherent” as consumers use it as a long‐term point of comparison. For example, an initial impression, or “imprint”, becomes a solid foundation, or “anchor”, for future decision‐making. Making comparisons on a broader scale Thinking more broadly thus will prevent a soup can coupon clipper from excitedly adding a $3,000 upgrade on a luxury automobile.Ĭhapter 2, “The Fallacy of Supply and Demand”, uses terms such as “imprint”, “anchor” and “arbitrary coherence” to explain the influence of the initial price listing on willingness to pay. He suggests that the more we have the more we want, and the only way to discontinue this practice is to break the cycle of relativity. For example, we compare our salaries, cars and houses to those we most closely associate which creates a desire to upgrade competitively. In the opening chapter, “The Truth About Relativity”, Ariely explains that “we look at our decisions in a relative way and compare them locally to the available alternative” (p. His book is based on behavioral economics, a field of study that examines why people do not always behave rationally and why they often make mistakes in their decisions. He uses empirical research and personal experience to answer his questions by deciphering why it is that when it comes to life choices and purchase decisions people do not act in rational ways.
For example, “Do you know why we sometimes find ourselves excitedly buying things we don't really need?” (p. Copyright © 2009, Emerald Group Publishing Limitedĭan Ariely, author of Predictably Irrational, asked some very interesting questions in setting out on his research regarding consumer behavior.
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