Priceless

Would you guess that the average temperature in San Francisco is more or less than 558ºF? Okay, what temperature would you guess? Absurd as the first question may be, it changes the way people answer the second. Those ‘primed’ with ridiculously high numbers give, on average, higher estimates.

To read William Poundstone’s Priceless is to be bombarded with one such jaw-dropper after another. This, plus the book’s remarkably engaging prose style, kept me glued to the page – except for the several occasions when I felt compelled to stop and share the latest stunner with my wife or the nearest bystander.

The focus quickly turns to the ways our cognitive biases affect our relationship with prices, and to how buyers and sellers can exploit those biases. Once again, the examples come fast and furious, most of them both sobering and hilarious at once. Most readers, like myself, will likely experience shocks of self-recognition.

There is the occasional howler: the analysis of Russian roulette (from an apparent misreading of economist Richard Zeckhauser’s work) is incorrect, although it’s amid a generally lucid account of the subtle inconsistencies that sometimes underlie apparently sensible choices.

And it’s not clear either how important any of this is for the science of economics. Yes, sometimes I overpay for a jar of grape jam, but to paraphrase the economist George Stigler, you’re unlikely to convince me that I live in a house instead of a tent because someone exploited my cognitive biases.

Still, the whole book is fascinating and fun, and I definitely think you should buy it. Would you be willing to pay £1358 for this book? Well, then – how much would you pay?

Prof Steven Landsburg is the author of The Big Questions

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