Priceless: The Myth of Fair Value (and How to Take Advantage of It) (45 page)

43. Selling the Money Illusion

230
“My dog is worried”: The joke is found widely on Internet quote sites, including
www.quotationspage.com/quote/1076.html
.

230
Contract A: You agree to sell: Shafir, Diamond, and Tversky 1997, 358.

230
“could have significant consequences”: Shafir, Diamond, and Tversky 1997, 358.

231
You agree to sell (version 2): Ibid., 357.

231
You agree to sell (version 3): Ibid.

231
people “naturally” look at things: Ibid., 358.

232
Jensen’s tactic: Jensen 2003, 36–37.

44. Neutron Jane

234
“the most expensive tryst in history”: DePaulo 2002, quoting an unnamed publication in Dublin.

234
Differing estimates; offer: Murray, Silverman, and Hymowitz 2002; Jones 2002. Jack was said to be offering assets valued at “$130 million over the course of Mrs. Welch’s life.”

235
Kozlowski likened to Welch:
BusinessWeek
Jan. 14, 2002.

235
$4 million salary, $8 million pension:
http://en.wikipedia.org/wiki/Jack_Welch
.

235
Perks: Murray, Silverman, and Hymowitz 2002.

236
Jack, furious . . . compared to Kozlowksi: Ibid.

236
“They critiqued the existing models”: Solnick interview, March 17, 2008.

236
Solnick’s background and study: Ibid.

237
“I want at least one of us to get something”: Solnick 2001, 193.

237
“women may end up with a smaller share”: Ibid., 189.

237
“If women take our first offer”: Solnick interview, March 17, 2008.

238
“If you really want to be fair”: Ibid.

45. The Beauty Premium

239
“There are no productivity issues”: Solnick and Schweitzer 1999, 203.

46. Search for Suckers

241
“Salesmen . . . categorize people”: Quoted in Ayres and Siegelman 1995, 317 (note 29).

241
“lay-down”: Ayres 1991, 854 (note 109).

241 instructed on how to dress: Ibid., 825.

242
“honey,” “cutie,” “You are a pretty girl”: Ibid., 846 (note).

242
“studying how sellers negotiate car sales”: Ayres and Siegelman 1995, 307 (note 11).

243
“who then proceeded to give them the worst deals”: Ayres 1991, 841.

243
“search for suckers”: Ibid., 854.

244
“Earlier this year, I asked a car dealer”: Ibid., 872.

244
paid an average of $319 less: Ibid. 848.

47. Pricing Gender

245
South African lender experiment: Bertrand, Karlan, Mullainathan, et al. 2005.

48. It’s All About Testosterone

248
Burnham experiment: Burnham 2007.

249
Soccer fans’ testosterone levels: Reported in Mazur and Booth 1998, 358.

249
London traders’ testosterone levels: Coates and Herbert 2008.

249
Aggressive responses to provocation: Mazur and Booth 1998, 355.

249
Swedish study: Cited in Mazur and Booth 1998, 355.

249
“We essentially create alpha males”: Kuchinskas 2007.

250
Button-pushing game: Kouri, Lukas, Pope, and Oliva 1995.

250
Married men have lower testosterone: See Khamsi 2007, which suggests the wedding ring tactic.

251
Ring finger and ultimatum game: Van den Bergh and Dewitte 2006.

251
Ring finger study: Coates, Gurnell, and Rustichini 2009.

49. Liquid Trust

252
Oxytocin boosted proposer offers 21 percent: Zak, Stanton, and Ahmadi 2007.

252
Zak fell for “pigeon drop”: blogs.psychologytoday.com/blog/the-moralmolecule/200811/how-run-a-con.

253
Liquid Trust: See
www.verolabs.com
. Another such product is OxyCalm (
www.oxy calm.com
).

253
the spray made his tips increase fivefold:
www.verolabs.com/salestool.php?UID=2009012012550469.239.113.151
.

253
“How Salespeople Use Liquid Trust”: Ibid.

50. The Million Dollar Club

255
$5 million offer to
Seinfeld
: CNN, Dec. 26, 1997.

255
TV star salary demands:
Entertainment Weekly
(no byline) 2006; Silverman 2003.

256
“Wage earners, we suspect”: Ariely, Loewenstein, and Prelec 2003, 99.

256
U.S. v. U.K., Japanese CEO pay:
www.stateofworkingamerica.org/swa08-exec_pay.pdf
.

257
“In the hall of fame of unintended consequences”: Nocera 2006.

257
“I absolutely thought [pay] would go down”: Ibid.

257
Steve Jobs compensation: DeCarlo 2007.

257 “Lone Ranger theory”: Reinhardt 2009.

257
“What’s a CEO worth”: townhall.com/columnists/WalterEWilliams/2008/01/02/greed,_need_and_money?page=full&comments=true.

258
Immelt as good a manager as Welch: Reinhardt 2009.

258
“Should there be a ratio”:
Hardball with Chris Matthews
, transcript for July 12, 2006.

51. The Mischievous Mr. Market

261
Graham’s stock valuation formula: Graham and Dodd 1934. See also Lowe 1996.

261
Arrow connected Tversky and Kahneman’s work to stock market: Arrow 1982.

261
“Does the Stock Market Rationally Reflect”: Summers 1986.

264
“They’d say, sure I knew”: Camerer 1997, 18.

265
“If they’ve lived through an inflationary experience”: Ibid., 19.

52. For the Love of God

266
“The skull is extraordinary”: Sandler 2007.

266
That sum was intended as publicity gimmick: Thompson 2008, 2.

266
50,000 FOR FISH WITHOUT CHIPS: Ibid., 2.

266
“We wanted to put them everywhere”: BBC News, June 1, 2007, news.bbc.co.uk/2/hi/entertainment/6712015.stm.

266
“Is it beautiful?”: Riding 2007.

267
“As a trope for human folly”: Lacayo 2008.

267
“almost sold . . . someone is very interested”: Sandler 2007.

268
The two-day sale total: Reyburn and Kazakina 2008.

268
“the price of it now would be double”: Lacayo 2008.

53. Antidote for Anchoring

269
Car value study: Mussweiler, Strack, and Pfeiffer 2000.

269
“consider the opposite”: Ibid., 1144.

270
“A friend of mine mentioned yesterday”: Ibid., 1145.

270
“I beseech ye,” “written over the portals”: quoted in Lord, Lepper, and Preston 1984, 1231.

54. Buddy System

274
Seventy-four percent gave the wrong answer: Only 13 of 50 subjects made no errors, with the other 37 making at least one error. See Asch 1963, 181.

274
“You’re
probably
right, but you may be wrong”: Ibid., 182.

55. The Outrage Theory

276
“generally effective,” “deeply traumatized by pills”: Kahneman, Schkade, and Sunstein 1998, 83.

276
“outrage theory”: Kahneman, Schkade, and Sunstein 1998; see also Kahneman, Ritov, and Schkade 1999.

276 “The unpredictability of raw dollar awards”: Kahneman, Schkade, and Sunstein 1998, 67.

278
“The unpredictability and characteristic skewness,” “Under these circumstances”: Ibid., 69, 75.

278
“which will make her more susceptible”: Ibid., 82–83.

279
“rest on a bedrock of moral intuitions”: Ibid., 61.

279
“conversion function”: Ibid., 76.

279
“Many new possibilities”: Ibid.

56. Honesty Box

280
“I said it was a very cute idea”: Johnson interview, Sept. 9, 2008.

281
“It is important to note”: Mandel and Johnson 2002.

282
“These are pretty big effects”: “Even the Furniture Can Affect Business Attitudes,” Stanford Graduate School of Business press release, Oct. 2004.

283
“I was surprised how big the effect was”: “ ‘Big Brother’ Eyes Encourage Honesty, Study Shows,” Newcastle University Press Office, June 28, 2006.

283
“When people are made to be self-aware”: Angier 2008.

57. Money, Chocolate, Happiness

284
History of Monopoly: See Wikipedia entry, “Monopoly (game),” en.wikipedia.org/wiki/Monopoly_(game).

284
Money priming study (Monopoly, screen saver): Vohs, Mead, and Goode 2006 and 2008.

285
donated only 58 percent as much: Vohs, Mead, and Goode 2008, 210. This is computed from the statement that the money-primed group donated 39 percent of their $2 payment, versus 67 percent for the control group.

286
“distrusting of others”: Ibid., 211.

286
“Priming effects may provide one of the mechanisms”: Transcript of 2008 Edge Master Class,
www.edge.org/documents/archive/edge253.html
.

287
“a microcosm of life”: Hsee and Zhang 2004.

288
Cockroach chocolate experiment: Hsee 1999.

Allais, Maurice (1953). “Le comportement de l’homme rationnel devant le risque: Critique des postulats et axiomes de l’école Américaine.”
Econometrica
21, 503–46.

———(1995). “The Real Foundations of the Alleged Errors in Allais’ Impossibility Theorem: Unceasingly Repeated Errors or Contradictions of Mark Machina.”
Theory and Decision
38, 251–99.

Allen, Marcus T., and William H. Dare (2004). “The Effects of Charm Listing Prices on House Transaction Prices.”
Real Estate Economics
32, 695–713.

American Psychologist
(no byline) (1983). “Daniel Kahneman and Amos Tversky.”
American Psychologist
, Jan. 1983, 2–9.

Anderson, Eric T., and Duncan I. Simester (2003). “Effects of $9 Price Endings on Retail Sales: Evidence from Field Experiments.”
Quantitative Marketing and Economics
1, 93–110.

Angier, Natalie (2008). “Mirrors Don’t Lie. Mislead? Oh, Yes.”
The New York Times
, July 22, 2008.

Arango, Tim (2009). “Bet Your Bottom Dollar on 99 Cents.”
The New York Times
, Feb. 7, 2009.

Ariely, Dan (n.d.). “Painful Lessons.” Available at
www.predictablyirrational.com/pdfs/mypain.pdf
.

———(2008).
Predictably Irrational: The Hidden Forces That Shape Our Decisions
. New York: Harper.

———, George Loewenstein, and Drazen Prelec (2003). “Coherent Arbitrariness: Stable Demand Curves Without Stable Preferences.”
The Quarterly Journal of Economics
118, 73–105.