Value = perception?
We assign value to products based on preconceived notions rather than objective analysis. B. Venkatesh Consider this. You are holidaying in a nice town and you are tired and hungry. There are several fast-food restaurants, all serving similar food at similar prices, except one. This particular restaurant sells food at a 25 per cent discount. Would you prefer to dine there? If you are like my friend who had to make a similar choice recently, you would prefer one among the full-price restaurants! Why? Value attribution The reason is because of what behavioural psychologists call as "value attribution". This means we assign value to products that we consume based on some preconceived notions than from objective analysis. My friend attributed value to the food based on its price. His reasoning was that if a restaurant was selling food at a discount, it was because it was not as good. Value attribution can lead to wrong decisions. We do the same when it comes to judging people. Consider the experiment that psychologists ran at the Massachusetts Institute of Technology. Stunning results Students in a certain class were told that a substitute teacher would deliver the course that day. The students were also given a brief profile of that teacher. Unknown to the students, half the class were given a profile that described the substitute teacher as "warm" and the other half, a profile that described him as "cold". After the class was over, all the students were asked to fill a feedback form. The results were stunning. Students who received the profile that described the teacher as "warm" gave a glowing feedback. The ones who received the profile that described the teacher as "cold" considered him to be serious, cold and uninteresting. The profile had a major impact on the students' perception of their substitute teacher. In other words, value attribution kicked-in. Now you may be able to better appreciate why a well-dressed person gets better customer service at a super market than you do. Or why "buy" recommendations from certain brokerage-firms drive up asset prices while others do not. It is all about perception or value attribution. (The author is an investment [email protected]) http://www.thehindubusinessline.com/iw/2008/12/21/stories/2008122150691400.htm Deeds, like seeds, take their own time to fructify. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
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