the hidden forces that shape our decisions

Responses to random questions can influence initial prices. The basic idea of arbitrary coherence is this: although initial prices are 'arbitrary,' once those prices are established in our minds, they will shape not only present prices but also future prices (this makes them 'coherent'). “ to make a man covet a thing, it is only necessary to make the thing difficult to attain.”

And the only cure is to break the cycle of relativity. Jealousy and envy, for example, spring from comparing our lot in life with that of others. But it can also make us downright miserable. Relativity helps us make decisions in life. They didn't have to decide in a vacuum because one was larger and more expensive. Why? Simply because consumers now had two models of bread makers to choose from. The marketing team then introduced an additional larger, more expensive bread maker, and sales rose. When Williams-Sonoma first introduced a home 'bread bakery' machine (for $275), most consumers were not interested. We not only tend to compare things with one another but also focus on comparing easily comparable things. This holds true for physical things, experiences, and ephemeral things: emotions, attitudes, and points of view. We can’t help always looking at the things around us in relation to others.

Like an airplane pilot landing in the dark, we want runway lights to guide us to the ground. Everything is relative, and that's the point. We don't even know what we want to do with our lives until we see a friend doing just what we think we should be doing. We don't know the speaker system we like until we hear a better one. Most people don't know what they want unless they see it in context.

For example, we don't know how much a six-cylinder car is worth, but we can assume it's more expensive than the four-cylinder model. Instead, we focus on the relative advantage of one thing over another and estimate the value accordingly. We don't have an internal value meter that tells us how much things are worth. Humans rarely choose things in absolute terms. “Everything is relative-even when it shouldn’t be.”

The hidden forces that shape our decisions