Get Out the Checkbooks

Legal Blog Watch Alert discusses a story in the Boston Globe titled Grape Expectations: What Wine Can Tell Us About the Nature of Reality. The story explores the influence of price-based expectations, such as how wine drinkers will prefer a more expenseive bottle over a cheaper bottle, even though the wine is exactly the same and the only difference is the labeling and the price. The blog post notes the conclusion of the article: “it is possible to make a product more ‘effective’ by increasing its price.” Excellent news! Accordingly, from this day forward, reading A Foolish Consistency will cost $100/month.

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8 thoughts on “Get Out the Checkbooks”

  1. We learned about the power of expectations in psychology class. There was this one study where a group of house cleaners were split into two groups, one where they were told the benefits of excercise and that there job was actual excercise and caused them to lose weight, and one where they only told them of the benefits of excercise. Four weeks later, the experiment group had lost an average of five pounds, had a lower hip-to-waist ratio, and reduced body fat just because of their expectations to lose weight.

    However, coming from someone who religiously buys the CVS “me too” brands because they are cheaper, I personally do not expect more expensive items to actually have a higher value just because of the higher price. So hopefully I am dodging the consumer power of expectations.

  2. This kind of thing happens all the time, especially in retail clothes. People feel more sophisticated and cooler when they wear expensive designer brands even though the clothes are not different from lower priced clothing. the same goes for women’s handbags, a plain leather handbag wouldnt cost very much, but as soon as you put two interlocking c’s on it (like the chanel label) the price skyrockets. People who purchase higher priced goods like the exclusivity of being able to purchase things that not eveyone can.

  3. It’s true people’s choices and perception of things are driven to great lengths by their expectations.However, many a times there are other affecting factors like age, personal experiences and values. The placebos might work well for someone who is relatively young and healthy as compared to a terminally ill aged person.Similarly, someone who is not very brand concious might not see much of a difference between a $500bag and a $50 bag and may focus more on the utility aspect of it.Nonetheless, the fact that alot of people have higher expectations from expensive products is used by corporations to manipulate consumer behavior and buying habits to increase their sales.

  4. I agree with Geetika’s last sentence. It is unfortunate that humanity has become obsessed consumers–valuing the quality of life with objects and monetary numbers. Not surprisingly, businesses exploit this. However, as a potential businessman and even ethically, I wouldn’t necessarily disagree with such tactics. But my concern is that people should generally place less blame on companies and less reliance on the government or consumer-advocacy groups. Although the article claims that humans are not entirely objective by nature, I think self-reliance through education and awareness can go far in combating societal habits that people are better off without.

  5. In San Diego their is a J-bx. This is a Jack N the Box, but nicer. They have waiters and fireplaces and sofas. You get your Junior Jack and Crispy Tacos on plates and you leave a tip for the waiter. It is the exact same drive through fastfood you can get at any other Jack N Box in America but it has a different appearance. I thought it tasted better(it proabbly didn’t), and the kicker…it is the same price!

  6. I actually sort of disagree with the article. I don’t believe people necessarily believe that a product is more “effective” per se because it is more expensive, but people will pay more for something for the experience it brings, the brands history, and the social-standing attached to that product.

    While it probably would make more sense to buy a cheap smoothie from a corner-store somewhere, a person will rather buy an over-priced smoothie, for example, from Jamba Juice because of the stores trendy design, their commitment to the environment, and mainly for how people will positively view them (the consumer) for making such a purchase.

    People will pay more, as shown by the wine purchases, for something that seems classier because they will feel classier for buying it. And it’s that feeling that makes the higher price worth the expense.

  7. This reminds me of something I saw on TV about a year ago. The program wanted to tell if food critics could actually taste the quality of food.

    They picked a very exclusive restaurant for the critics to dine in, although the food was all canned and mostly frozen, very cheap, and cooked in a dirty trailer. As expected, all the critics complimented the chef. All except one, who claimed the food was made out of cheap materials.

    At least one critic knows what hes doing.

  8. Spot on with this write-up, I really believe this web site needs
    a great deal more attention. I’ll probably be returning to read through more, thanks for
    the info!

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