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How Much Do We Differ From Others and When Do We Know it?

How Much Do We Differ From Others and When Do We Know it?

This video was recorded at MIT World Series: Back to the Classroom 2005. Envy Shane Frederick's Consumer Behavior students. They get to assign prices to such real but quirky products as jalapeno- and popcorn-flavored jelly beans, as well as to hypothetical products, like a pill that enables one to speak French instantly. More to the point, Frederick asks his student-confederates whether they would pay more or less than others for these goods. From classroom experiments and his own research in cognitive and social psychology and decision theory, Frederick has discovered a "false consensus" around our "willingness to pay for goods" (WPG). Individuals assume that whatever they would be willing to pay for an item, others would pay more. This applies to imaginary and actual products, as well as to such experiences as "spending time in a discomfort room." And while Frederick's research shows how firmly individuals differentiate themselves from others, at least around "WPG," he remarks on an apparent paradox: people find common preferences when confronted with stimuli as disparate as Chinese ideograms, sachets, and even lines arrayed on a page. Frederick concludes that "a shared evolutionary and cultural history induces some degree of agreement about nearly everything," so that our own beliefs are often "the best signal (we) have about others' preferences." Yet, don't assume too much, because "humans have a widespread, mistaken belief that they value things less than others." Frederick sees some relevance in these findings for marketing strategy as well as business practices.

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