Marketing Manipulation A Consumer's Survival Manual

Marketing
Manipulation
A Consumer's Survival Manual
World Scientific–Now Publishers Series in Business
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World Scientific – Now Publishers Series in Business: Vol.14
Marketing
Manipulation
A Consumer's Survival Manual
Michael Kamins
Claremont College, USA
World Scientific
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Library of Congress Cataloging-in-Publication Data

Names: Kamins, Michael A., author.
Title: Marketing manipulation : a consumer’s survival manual / Michael Kamins
(Claremont College, USA).
Description: New Jersey : World Scientific, [2018] |
Series: World Scientific-Now Publishers series in business ; Volume 14
Identifiers: LCCN 2018011140 | ISBN 9789813234703 (hc : alk. paper)
Subjects: LCSH: Consumer behavior. | Marketing--Psychological aspects.
Classification: LCC HF5415.32 .K35 2018 | DDC 381.3/3--dc23
LC record available at https://lccn.loc.gov/2018011140
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Copyright © 2019 by Michael Kamins

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Printed in Singapore
About the Author
Michael A. Kamins is currently a Professor of Marketing at the Peter F.

Drucker School of Management at Claremont College. He was previously
a Professor of Marketing, Area Head and Director of Research at Stony
Brook University (SUNY) at the Harriman College of Business. He also
taught for 25 years at the University of Southern California as well as at
the Bernard M. Baruch College of the City of New York (CUNY) and
New York University.
v
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Contents
About the Author v
Chapter 1. The Impact of the Marketing Environment 1
Chapter 2. System I Processing 15
Chapter 3. Cognitive Biases and System II Processing 25
Chapter 4. Social Biases 57
Chapter 5. Memory Biases 69
Chapter 6. The Problem of Inertia 85
Chapter 7. Price and Its Influence Upon Choice 93
Chapter 8. Deceptive Products: Consumer Confusion,

Secondary Meaning and Dilution 109
Chapter 9. Marketing Manipulation by the Drug

Companies is Enough to Make You Sick! 123
Chapter 10. Selling Tactics That Have the Potential to Deceive 139
vii
viii Contents
Chapter 11. Deceptive Advertising and Promotional

Techniques 151
Chapter 12. Political Advertising and Deception 175
Chapter 13. Manipulative Marketing Research from

Questionnaire Design to Results 191
Chapter 14. Winning Strategies for Online Purchases

(eBay, Priceline and StubHub) 209
Chapter 15. Wrapping It All Up 225
Index 233
Chapter 1
The Impact of the Marketing Environment
Imagine that you are taking your weekly trip to the supermarket to buy
groceries with your significant other, and as you pass by the cereal aisle,
you reach for a box of Kelloggs’ Frosted Flakes and quickly place it into
your shopping basket. Your significant other, whose main role in life seems
to be to serve as the critic of what you eat and how you lead your life in
general, tells you: “Get that stuff out of the shopping cart, first of all, it’s
not good for you and secondly it’s for kids!” You counter her arguments
by telling her that everyone who knows Tony The Tiger, the spokes-tiger
for Frosted Flakes knows that they are GREATTTTTTTTT for you, taste
good, and moreover as Kelloggs’ own advertising just recently suggested,
are not ONLY just for kids, but for adults too, so there!
But is your choice of Kelloggs’ Frosted Flakes a decision as simple
as merely tossing it into your shopping cart? Let’s back up just a bit
and examine more deeply what influenced you to choose Frosted Flakes
in the first place, and what factors contributed to your belief that it is
“great” for you and great tasting to boot! A colleague of mine from
Stony Brook University studied this very question and found out that
the advertising characters that one is exposed to in childhood influence
your brand evaluations when you become an adult.1 So for those of you
who had warm and fuzzy feelings when you were a kid about the Burger
1 See Connell, Paul M., Merrie Brucks, and Jesper H. Nielsen. “How childhood advertising
exposure can create biased product evaluations that persist into adulthood.” Journal of
Consumer Research 41(1) (2014): 119–134.
1
2 Marketing Manipulation
King, Ronald McDonald, Tropicana, Toucan Sam, Tony the Tiger, Chiquita
Banana, Captain Crunch and the like, those feelings in many cases may have
evolved into a deeper yet subconscious commitment to these icons and the
brand they represent as you grew into adulthood. No, I am not insinuating
that you had an affair with any of these characters, nor can I conclude
that you obsess over them day and night. What I can conclude, however,
is that the positive feelings you had toward these advertising characters
when you were a kid are alive and well today when you are an adult
and you may not even know it! The feelings that you hold toward these
characters can potentially result in a preference for the brands that feature
them, and ultimately an “enduring bias” toward the quality of the brands
they represent. In the case of Frosted Flakes, this bias toward Tony the Tiger
may reflect itself in the degree of nutritional health benefits that you believe
the product conveys to you. In other words, if you liked Ronald McDonald
as a child, the fries that you eat as an adult are perceived as healthier than
other brands; if you liked Tony the Tiger as a child, then as an adult you are
more likely to perceive the cereal as healthier than those not familiar with
this 1950s icon.
It is easy to simply discount these findings about Tony as just a figment
of the imagination of some mad academic researchers in an ivory tower
with lots of student subjects, time on their hands and a computer to analyze
the resulting data. But these findings spanned two countries and focused
on actual consumers outside of the classroom. Indeed, the cynic might
argue: “everyone knows these characters are just that — characters, they
have no impact on me now, and had no impact on me then, why would
anyone prefer a food just because it had an advertised character?” The
answer comes from a study from Yale’s Rudd Center for Food Policy and
Obesity.2 This research, using identical products (graham crackers, gummy
fruit snacks and carrots), found that the packaging that contained a cartoon
character as opposed to one that did not resulted in significantly more
2 See Roberto, Christina A., Jenny Baik, Jennifer L. Harris, and Kelly D. Brownell. “Influence
of licensed characters on children’s taste and snack preferences.” Pediatrics 126(1) (2010):
88–93. See also Lapierre, Matthew A., Sarah E. Vaala, and Deborah L. Linebarger. “Influence
of licensed spokes-characters and health cues on children’s ratings of cereal taste.” Archives
of Pediatrics & Adolescent Medicine 165(3) (2011): 229–234.
The Impact of the Marketing Environment 3
4–6 year-old children preferring the snack with the cartoon character. But
the findings do not stop there; the kids actually believed that the packaging
with the cartoon character tasted better. So, the link between, the use of
advertising characters and better taste starts at a young age, that is, this is
probably as a result of extensive exposure to kids cartoon programming and
advertisements with engaging characters hawking products to their young
viewers.
This product preference can then travel across time, even decades,
influencing us as an adult to prefer the same brand that we loved as a kid,
only now, not only causing us to rationalize that our product preference
tastes better than the competition, but even that it is more healthy for
you. This led my colleague at Stony Brook to argue that parents today
should take more care in checking the labels on the products they have
loved and embraced since they were children because it is possible that
affectionate feelings for brand characters that they carry from childhood
can interfere with the relevant nutritional information on the box. It also
suggests that each of us should more carefully examine our brand choices
to make sure that childhood desires are not subconsciously leading us to
choose unhealthy foods in the present for ourselves and for our children.
That is, just because you were cuckoo for Cocoa Puffs as a child, does not
mean that “Sonny the Cuckoo bird,” (yes, that’s his name) should have a
shot at influencing your kids’ cereal choice.
By now you have probably heard enough of cartoon characters and
brand symbols, and you have made a silent vow not to let them interfere
with your product choice. So, armed with this newfound knowledge you
go back into the supermarket and re-start your shopping trip. As you begin
shopping, I implore you to begin paying attention to the background music
being played. Once you do this, you may begin to wonder why the tempo
and beat is so slow? You ask your significant other, but she says that she
doesn’t pay attention to such things, she just shops. But as you reach the
checkout, you realize that not only have you spent an inordinately longer
time in the store than you typically would want to, but you seem to have
bought more. This, while a surprise to you, is not a surprise to those
researchers who examine environmental stimuli and their impact on the
consumer. Indeed, there are many studies which have shown that slower
music tempo in a shopping environment gets the consumer to walk slower,
and when you walk slower you notice more things, and when you notice
more things . . . guess what . . . you purchase more things.3 I guess a side
benefit to this environmental manipulation, however, is that you are getting
free dancing lessons in the supermarket as you subconsciously move to the
beat of the music. Who knows maybe one day you can fulfill your secret
dream of getting on the hit show, “Dancing with the Stars.”
So now you are avoiding brand characters and trying to walk quicker
than the music that’s playing in the background so you are not influenced
to buy items you didn’t plan on buying in the first place. All of a sudden,
you notice that it’s cold and drafty in the supermarket, so you put on
your extra sweater but still the tip of your nose has a certain chill. By
putting on that extra layer of clothing you are engaging in a physical
process called thermoregulation, defined as an attempt to keep our internal
temperature within certain boundaries.4 However a set of researchers from
my Alma Mater, Bernard M. Baruch College, claim that humans, aside from
thermoregulating themselves on the physical dimension of warm–cold, also
engage in a mental form of thermoregulation via decision-making styles.5
For example, someone who is referred to as a “Hot-Head” is an individual
who defers to his/her emotions, whereas someone who is described as “cool
and calculated” typically is seen as taking one’s time to think from an in-
depth carefully considered cognitive perspective. Is it possible that when
an individual is feeling cold, that they may adopt a decision-making style
that is emotional or warm in nature, and that when one is warm they may
thermoregulate by adopting a more calculating (cool) and cognitive decision
style? Hadi, Block, and King (2012) studied this phenomenon in a series of
experiments designed to examine the cognitive approach consumers took
to a decision choice involving the consumption of a relatively unhealthy
rich chocolate cake versus a more calorie-deprived fruit salad for a snack.
3 Milliman, Ronald E. “Using background music to affect the behavior of supermarket

shoppers.” The Journal of Marketing 13(2) (1982): 286–289.
4 Brunjes, Peter C., and Jeffrey R. Alberts. “Olfactory stimulation induces filial preferences
for huddling in rat pups.” Journal of Comparative and Physiological Psychology 93(3)
(1979): 897–906.
5 Hadi, Rhonda, Lauren Block, and Dan King. “Mental thermoregulation: affective and
cognitive pathways for non-physical temperature regulation.” NA — Advances in Consumer
Research 40 (2012): 42–47.
When subjects were previously asked to drink a hot liquid, (used to induce
feelings of warmth), more than twice as many individuals chose the fruit
salad as opposed to the chocolate cake. Moreover, when another group of
subjects was asked to drink the iced drink first, the majority then chose the
chocolate cake. What do these findings suggest? If one is feeling overly
hot, then pursuing a cognitive decision approach which is perceived as
cool should be utilized as a form of thermoregulation. Therefore, the more
healthy fruit salad should be more decidedly chosen over the unhealthy
chocolate cake in this condition, as it indeed was. Likewise, if one is cold,
and warmth is needed to self-regulate via thermo-regulation, then the more
emotive decision-making approach should be taken, and more individuals
should chose the chocolate cake over the fruit salad, as was found.
For those doubting Thomases among you who think that this result
is strange, consider the authors’ second experiment where the focus
involved the dollar amount of insurance the owner would purchase for
an antique clock. The clock was either described as having significant
sentimental value or not. Subjects were again exposed to the hot/cold
drinking manipulation discussed previously. After drinking the contents
of the glass, subjects were then given the clock manipulation where either
the sentimental value was expressed or it was not. Findings showed that
consumers were willing to purchase generally higher amounts of insurance
for the “sentimental” family heirloom clock, relative to the identical clock
that was not described as such, but only when subjects had consumed the
cold drink. But why? . . . because drinking the cold drink led to the need for
mental thermoregulation, which manifested itself in affective or emotional
(warm) thinking, as those participating in the experiment got in touch with
their sentimental selves. These individuals felt the emotional need to insure
the antique clock against loss when the sentimental value of the clock was
highlighted by the experimenter.
This temperature effect on decision-making also was shown to be
evident in a series of studies conducted in Israel led by a researcher from
the Hebrew University.6 Tapping into prior research which shows that
6 Zwebner, Yonat, Leonard Lee, and Jacob Goldenberg. “The temperature premium: Warm
temperatures increase product valuation.” Journal of Consumer Psychology 24(2) (2013):
251–259.
physical warmth leads to social warmth and appreciation of others,7 and

that brands are often used as a device to reflect one’s own identity,8 the
authors maintained that when the consumer is physically warm or even
feeling hot, their willingness to pay for a variety of different products is
significantly greater than when they are not feeling hot and bothered. For
example, in one of their experiments, subjects were placed into a room
where the ambient temperature was set at either 79◦ (warm) or 65◦ (cool).
Next, participants were told that they would be presented with images
of a number of products that were available for purchase. The results
showed that participants in the warm room were willing to pay more for
the products than those in the cooler room across 11 different product
categories. The researchers claimed that the effect found was driven by
the emotional warmth driven toward the product that the physical warmth
had induced. So, if we value products more and are willing to pay higher
prices for them when we are uncomfortably hot, those of you who late at
night are sitting in a hot room at your computer trying to snipe on eBay,
may be better served to put some ice cubes on your head, turn on the air
conditioner, go to bed, and place your bids in the morning. You may find
that the amount you wish to bid is lower, consistent with the temperature in
the room.
But if physical warmth triggers emotional warmth toward others and
toward the products we consume, does it also possibly influence those who
we seek for advice when making key decisions? Research in decision-
making with financial consequences makes the claim that consumers are
disposed toward using others’ opinions as input into choice decisions when
individuals are warm. That is, a tendency to “conform to the crowd” was
evident in research recently conducted at a Hong Kong university, finding
that when environmental conditions are warm, this increased the subjects’
perceptions of social closeness to other decision-makers, resulting in others’
7 Bargh, John A., and Idit Shalev. “The substitutability of physical and social warmth in
daily life.” Emotion 12(1) (2012): 154. Also the implications that physical warmth leads to
closeness to others has humongous implications for dating. If this is true then don’t go on
a date in Alaska during the Winter.
8 See Fournier, Susan. “Consumers and their brands: Developing relationship theory in
consumer research.” Journal of Consumer Research 24(4) (1998): 343–373.
opinions being given greater weight in decision-making.9 This research

used none other than the racetrack to test this proposition. In this context, it
was found that on days when the temperature at the track was warmer, there
was a greater tendency for bettors to place bets on what is known as the
“chalk” or, in simple parlance, the favorite horse. This is because betting
on the favorite represents what is generally known to be the “wisdom of the
crowd.” After all, that is why the horse is the favorite, because more people
think that he/she will win the race! Justify’s Triple Crown win at Belmont
occurred on a warm day where the temperature reached 83 degrees. Coupled
with the fact that he was the sentimental favorite, many $2 win tickets were
placed on him. If history follows a pattern (see American Pharoah), many
of these tickets will never be cashed as pundits believe that they will be
worth more on eBay later than presently at the track.
So, you say, I don’t go to the racetrack and I don’t use off-track betting,
in fact I am NOT a gambler, so this segment of the book does not apply to
me! Really? I’ll bet that many of us who do not consider themselves to be
gamblers, are actively involved in “investing” in the stock market, which I
have been told is the biggest gamble of all. So as you sit at home plugging
away at your computer, making financial decisions regarding where to
allocate the money you just placed in your 401 K, if you happen to do
this task on a hot day, do you simply buy the stock that analysts all prefer?
Or maybe you go into an air conditioned room and place your money on
that penny biotech stock that someone told you could go to the moon, if it
simply completes a Phase I, II and III trial and ultimately gets approved by
the FDA. And if you are doing your tax return on a cold day or with the
air conditioning blowing down hard on your back, do you finally decide
to get “creative” with your tax return and shun the advice of your well-
intended accountant? Clearly, the findings of this particular study extend
well beyond the racetrack and should bring your attention to the fact that
the air-conditioning works well in San Quentin, where socialization with
other prisoners may not be a good idea!
9 See Xun (Irene) Huang, Meng Zhang, Michael K. Hui, and Robert S. Wyer. “Physical
warmth and following the crowd: The effect of ambient temperature on preference for
popularity,” in NA — Advances in Consumer Research, 40, Zeynep Gürhan-Canli, Cele
Otnes, and Rui (Juliet) Zhu, (eds.), Duluth, MN: Association for Consumer Research (2012),
pp. 42–47.
So, now back to the story. Here we are, still in the supermarket, staying
away from brand characters, paying attention not to dance to the beat of
the background music that’s playing and now cognizant of the temperature
inside the supermarket itself. So when you go to choose your favorite brand
of spaghetti, you now wonder, is it truly my favorite brand, or is it the favorite
brand of my significant other, and I chose it just because they have the heat
on in the supermarket? In addition, am I feeling particularly amorous toward
my significant other because I truly love her, or is it the heating system in
the supermarket at work again or am I wearing thermal underwear? In any
event, at this point the trip to the supermarket is getting more complicated
than anyone can ever imagine. So, with the wind of the heating system
blowing at your back, and the cash register ringing up your final purchase,
you decide to take your significant other to the movies to relax, and it should
shock no one that the choice is to see a romantic movie.
You arrive early at the box office, find a good seat, and sit down with
your significant other with the sole intention of relaxing. But now, the price
you pay for being early is that before the movie begins, you typically have to
sit through 10 minutes of advertising and another 10 minutes of previews,
for movies that you have absolutely no intention of seeing and products
you have no intention of buying. So, you plan ahead and rush out to buy
some popcorn as a diversionary tactic, and start to munch quietly through
the advertising and through the previews. Interestingly, research shows that
the act of munching on popcorn serves to disrupt the process of cognitive
focus which typically involves one covertly and silently simulating the
pronunciation of the more familiar words present in the advertisement
(typically the brand name).10 If you doubt that we covertly and silently
repeat words, just think about how you behave when reading a book. Is
there anyone out there who can read without mouthing or repeating the
words in their head?11 This silent and covert simulation has been shown to
10 See for example, Stroop, J. Ridley. “Studies of interference in serial verbal reac-
tions.” Journal of experimental psychology 18(6) (1935): 643; as well as Topolinski, Sascha,
Sandy Lindner, and Anna Freudenberg. “Popcorn in the cinema: Oral interference sabotages
advertising effects.” Journal of Consumer Psychology 24(2) (2014): 169–176.
11 I admit to having the amazing ability not to repeat the words of the text silently when
reading books in Icelandic.
underlie the famous “mere exposure” effect12 where it was found that the
more a stimulus is repeated the more it is liked. You all know this effect
maybe not by its name, but certainly by its impact upon you. Simply go
back in memory to when you were a kid and heard a song on the radio. The
first time you heard it, it may have caught your ear (like Wrecking Ball,
although the visuals there was where all of the action was). The second
time you heard it, you liked it a little better, and when it became familiar
and you could sing along, you liked it a lot. A recent study conducted
in Germany found that munching on popcorn, or talking during previews,
(something that is sure to get a shussssh from the person behind you), served
to immunize the viewers from the impact of the advertising presented in
the cinema. The munching interrupted the silent repetition of the brand
name and distracted the individual from processing the advertising. So, if
you do not need what they are hawking at the cinema, and are annoyed by
seeing the advertising or previews, simply munch away, and be proud of it!
Munching may interfere with your amorous intentions however.
Our story, does not end here at the movies, rather this venue will serve as
the pushing off point for the rest of our journey exploring how without being
armed with the proper knowledge, one can be unintentionally directed to
make specific decisions and come to specific conclusions by marketing tac-
tics designed to influence how you think, feel and act. This book is intended
to shed light on your daily adventure as a consumer in a world in which
you are exposed to an estimated range of from 200 to 5,000 advertisements
a day, telemarketing on steroids and purchase decisions that range from
buying a cup of coffee to evaluating whether you need one, two, three,
four or five blades on your safety razor to deciding which house or car to
purchase. Notice, I have not even mentioned the 25 calls on your cell phone
that you get daily which are labeled by your phone as “Potential Fraud.”13
At this point, it should be evident that factors existing in the environment
itself influence how you think, feel and act toward brands. These are factors
12 Zajonc, Robert B. “Attitudinal effects of mere exposure.” Journal of Personality and

Social Psychology Monograph Supplement 9(2) Part 2 (1968): 1–27.
13 I recently missed a meeting with the Dean of the College of Business when my cell
phone mistakenly labeled his number as a “potential fraud.” Maybe the phone knows more
than I do?
that the store, movie house or even online marketer can manipulate to serve
to manipulate you. However, environmental factors in a sense are a step
away from marketing manipulation of the actual product and the way it
is promoted to the public, priced or distributed. In marketing, we often
convey the idea that a product is sold through the consideration of the
4 Ps or what is affectionately known as the “marketing mix.”14 In this
regard, Borden (1964) described the marketing manager as a “mixer of
ingredients, one who is constantly engaged in fashioning creatively a mix
of marketing procedures and policies in his efforts to produce a profitable
enterprise.” But what does this marketing chef mix? The answer is the
product itself, the price charged for it, how it is communicated to the
public through advertising and promotional techniques and finally where it
is distributed or placed. For each of these 4 Ps, (product, price, promotion,
and place), marketers can utilize techniques which can serve to influence the
public into purchasing the product, sometimes through the use of complex
psychological approaches triggering inherent consumer biases that are
either cognitive, memory or socially based. I am not saying that in each and
every purchase decision, the consumer is manipulated by corrupt marketers
to purchase their product like mindless zombies. I AM saying that there are
tools on the side of every marketer which can tilt the consumer’s decision
process a bit toward that specific seller’s offerings. An awareness of such
tools and techniques in advance would be beneficial to the consumer as
he/she moves toward purchase, specifically of higher ticket items such as
cars, household appliances, electronic items and even the purchase of one’s
home.
The purpose of this book is to describe in detail such techniques so
that the consumer is, at the very least, aware of them and, at the very best,
armed with knowledge to combat them. Hence, the chapters that follow will
focus on each of the 4 Ps as well as selling techniques used by marketers
which serve to induce purchase. We will also devote chapters to marketing
techniques used in areas involving products and services that the consumer
will most likely be exposed to on a continual basis such as prescription
drugs, political campaigns and the Internet.
14 See Borden, Neil H. “The concept of the marketing mix.” Journal of Advertising
Research 4(2) (1964): 2–7.
However, before we disembark on a thorough discussion of these

marketing mix elements, a tutorial is needed in advance to introduce the
various consumer biases (cognitive, social and memory based) that impact
the way we think, feel and act. That is, these biases represent tendencies to
think and act in certain ways that in fact can outwardly reflect rigidness and
inflexibility and ultimately poor decision-making. Such biases can lead to a
significant deviation from a standard of rationality or good judgment, but yet
seem perfectly rational to the individual. This is because the bias reflects
the way the individual has always thought or behaved in their arrival at
choice options! If marketers are aware of these biases, then they can utilize
them against the consumer by facilitating one’s brand choice consistent
with such existing biases. For example, consider the availability heuristic,
a famous cognitive bias.15 This bias reflects the ease with which one can
bring to mind exemplars or examples of a specific event resulting in an
overestimation of the likelihood that a given event occurs as a function of
recent past history. So for example, in selling insurance for the loss of one’s
credit card (in case it is lost or stolen), the vendor can emphasize the fact
that a credit card is lost or stolen in America every 5 seconds or so, or
that you (the buyer) probably know someone who has experienced identity
theft in the past year. These selling tactics simply serve to make you more
sensitive to such events happening to you and therefore more willing to
purchase the protection. Selling hurricane insurance would seemingly be a
bit easier in Texas and Florida after the recent arrival of Harvey and Irma.
When you are on the receiving end of such a selling technique in light of
being on the receiving end of such a hurricane, it is hard to resist unless
you know what the seller is attempting to do and formally which cognitive
bias they are trying to tap into.
Consider another simple example, we all know that “more is better,” or
is it?16 Aside from my profession as a marketing professor, I also frequently
serve as an expert witness in judicial cases involving marketing issues.
In this capacity, I am often asked to undertake a survey of consumers to
15 Folkes, Valerie S. “The availability heuristic and perceived risk.” Journal of Consumer
Research 15(1) (1988): 13–23.
16 Solnick, Sara J., and David Hemenway. “Is more always better? A survey on positional
concerns.” Journal of Economic Behavior & Organization 37(3) (1998): 373–383.
determine how important various attributes of a product are in triggering

or motivating their purchase. For example, I once worked for a pie and
restaurant company based in California who was being sued via class action
by a group of consumer plaintiffs because the fat content on the label of
their Chicken Cordon Bleu frozen entrée was underestimated. According to
the lawsuit, a reduction in fat content on the label led California consumers
to believe that the entrée was healthier than it really was and generated
sales to the public that would not have occurred if the entrée was properly
labeled. I was asked to undertake a survey evaluating the importance of
various attributes in the purchase of a frozen dinner entrée. The findings
showed that flavor was most important, followed by value, with fat content
way down the list. Hence, the survey showed that consumers who bought
the focal brand did so mostly for other reasons than fat content, revealing
that for many consumers fat content was not critical in their decision choice
and was not heavily relied upon.
In another case, a consumer chose to sue a breath mint company
because the total weight of the package of mints listed on the package was
significantly less than the actual weight inscribed on the side of the package.
In his deposition, the plaintiff claimed that everyone purchases breath mints
mainly because of the weight of the package, and from a comparative
brand perspective, the more ounces the better. The attorney who took this
consumer’s deposition then asked him if he purchased everything as a
function of its weight inclusive of his car, he responded yes! He was then
asked if he would prefer to eat a slice of cheesecake that weighed 8 pounds
or one that weighed 8 ounces . . . the answer is still forthcoming.
But the “more the better bias” can spring up out of the blue when you
least suspect it. Consider, the shopping trip that I took today with my son to
the local CVS drugstore in search of a probiotic that my doctor said would
be good for me to take. On the shelf were different options, inclusive of
pills, that ranged from 3 billion active bacteria to 20 billion. That’s Billion
with a “B”! The idea that I could buy and consume a tablet that had almost
three times as many individual bacteria as the world’s human population,
made me feel powerful to say the least. It almost made me forget about
trying to figure out how they got all those bugs inside the pill, as well as
my possible class action suit against the company, if after counting, I found
that I was one bacterium short!
Now, without any idea regarding how to evaluate which brand of

probiotic is best, I immediately told my son that I had to have the one
with 20 billion in the pill, since after all, more bacteria is good, no? But
wait, “aren’t we told that bacteria is bad, I said?” “But this is the good kind”
my son said. “How do you know, I asked are they wearing white hats?” So
as I got to the checkout, my son yelled, don’t buy it yet, I found a pill with
100 billion in it.” “Must be a big pill I shot back, and I bought it.” After all,
more is better right?
In summary, reading this book will not make you bulletproof from
marketing manipulation, since marketing offers, like weeds, grow every
day. However, reading the book will make you attend to and critically
interpret marketing tactics and approaches that you may never have even
given a second of your time or attention to previously. The book will provide
you with a kind of X-ray vision to see through attempts to influence you
and more importantly to see repeatable patterns that marketers can and
have used to get you not only to purchase their product but to make you
think that you made the best purchase possible. In addition, we will discuss
how you can avoid cognitive, social and memory-based biases to get the
best price, particularly when you are using an online purchase environment
where price is fluid (think Priceline and eBay as examples).
So now, let’s begin the process of making you a knowledgeable
consumer. We begin in Chapter 2 by first shedding light on the way
that we as humans typically approach decisions, often through the use of
simplified and automated/unconscious heuristics (i.e., simple rules). That is,
we often use basic decision rules when facing a complex decision-making
environment, designed to help us navigate through the decision process
with some relative degree of ease. Yet, you the reader may realize that
sometimes, when it really matters, we do tend to take our time and consider
even minute details when coming to a decision, oftentimes about something
that is near and dear to us (e.g., the decision involved in the purchase of a
car or the choice regarding which university we should attend). As noted
by Kahneman (2011),17 human decision-making is currently widely seen
17 See Kahneman, Daniel. Thinking Fast and Slow. New York: Farrar, Straus and Giroux
Press (2011), pp. 19–31.
as being governed by two cognitive systems: automated rules or heuristics

(System I) that produce rapid actions and perceptions over which we have
little conscious control, and more deliberative or reasoned rules (System II)
that more carefully consider features of the environment, and over which we
have considerable conscious control. Understanding when and why we use
each of these different systems is a first step in being aware of our marketing
environment. It is important to note however, that, the consequences of
using “System I” by putting our mind on autopilot can make us susceptible
to a myriad of selling schemes presented by unscrupulous marketers.
For example, deceptive sales schemes used by internet marketers can be
effective by endowing websites with features that encourage decisions to
be made by System I (instinctive) processes, while suppressing features
that would activate System II (reasoned) processes. These latter processes
could otherwise serve to alert and discourage consumers from signing up
for programs and “deals” that have little real value, and for which in many
cases, the majority of consumers are not even aware that they have signed
up for in the first place!
Chapter 3 sheds light on an important human behavioral tendency which
is caused by cognitive, memory-based and social biases which arise as a
function of the type of processing we use when making decisions. This
behavior, called System II processing is so prevalent among us that we tend
to ignore it, and therefore even accept it as “normal.” But its presence, if
left undetected, leads to poor decision-making and conservative choices
that hurt you financially and even emotionally. Starting with Chapter 4,
we take a deep dive into a discussion of the cognitive, memory-based and
social biases in the chapters that follow as they impact decisions. Let’s now
begin and step into the world of “Marketing Manipulation.”
Chapter 2
System I Processing
A. Pound Cake?
Just the other day, for my wife’s birthday, I decided to buy her a cake from
an upscale supermarket in our neighborhood. I knew that her favorite type
of cake was an Apple Crumble and I found one rather quickly on the shelf
which also appeared to be on sale. Lucky me, I thought as I scanned the price
asked for the cake. The packaging said, “$39.99 per pound,” and right below
this the label indicated the following: YOUR PRICE: $29.99. For a split
second, the irrational thought crossed my mind that the reason the cake is on
sale is because . . . They must know that I’m the kind of guy who doesn’t pay
retail, and because this purchase is for a special event, MY PRICE is $10.00
off . . . or maybe because I’m such a nice guy and they knew this in advance
they are giving me a price break! Then I came to my senses and realized
it really doesn’t matter why the price discount is present, just scoop it up
stupid, place it in the basket and be thankful that you purchased a great cake
for a great price. When I arrived home, I opened the cake and placed it on our
cake stand, and for the first time noticed that it seemed rather small. Then
when I looked at the package, the cake weighed in at only 12 ounces, not the
ONE pound that I had assumed. Therefore, the reason that MY PRICE was
$29.99 and not $39.99, was because I only bought ¾ of a pound! There was
no BIG sale, only an underweight cake in comparison to what I expected!
Indeed, the FTC might consider such price labeling as deceptive, since such
labeling has the potential to mislead consumers. But then again, the FTC
may come to the conclusion that I should have more carefully examined
the label in advance to discover the actual weight of the cake.
15
But what caused the deception? Well, to be honest, I actually deceived

myself as I expected that, in general, cakes are sold in pounds as a unit of
measurement, not 12 ounces. Just like coffee used to be packed in 16-ounce
cans, today one is lucky to get an 11-ounce can of coffee. The use of such
potentially deceptive pricing tactics are geared to get consumers to engage in
System I processing.1 Such processing is best described as resulting in fast,
associative, effortless and often emotionally charged actions over which one
has little conscious control. This processing involves rapid and automatic
actions or perceptions for which we have very little cognitive awareness,
almost as if we behave on automatic pilot attracted to bright lights and
environmental cues as moths are attracted to a flame. A central feature of
System I processing is that consumer perceptions and behaviors are often
driven more by the cues consumers expect to see in an environment rather
the cues that are objectively there. Hence, it is through System I processing
that my quick and false assumption that the cake weighed a pound was
derived; I simply believed it did, and so it did . . . until it didn’t.
For example, suppose that you entered a gas station that had a large sign
visible from the road which stated the price for gas purchased using “cash”
and a price for gas purchased using “credit.” Now suppose that you intended
to pay with your debit card, for gas using your debit card, the question then
is, what price would you expect to pay for your gas? Since the sign does not
indicate the price of gas when paid by the use of a debit card, the consumer
is left to his/her experience as to the price they expect to pay when using
their debit card. Hence, when the seller provides incomplete information at
the point of purchase, the consumer is left to utilize System I processing to
engage their expectations regarding what price they will pay at the pump.
What price would you expect to pay with your debit card, the “cash” price
or the “credit” price?
Consider another example, that of online marketers who offer one the
opportunity to gain detailed information on anyone in the country for the
“low” price for example of only 95 cents. One simply needs to click on
the bright orange button, to get the deal and receive 75% off of the “regular”
1 Kahneman, Daniel. “Maps of bounded rationality: A perspective on intuitive judgment and

choice.” Nobel Prize Lecture 8 (2002): 351–401.
System I Processing 17
price. However, if one clicks on the button, they could be immediately

enrolled into a monthly program often run by a third-party vendor who
receives their payment information, which requires the consumer to make
the cognitive effort to cancel the program if they are not happy with it.
But canceling the program is an action that few consumers take because
many are unaware that they even joined the monthly program in the first
place. This pricing approach is called, “negative option pricing” that makes
acceptance of membership the default action for consumers, shifting the
burden of effort in the sales process from the seller to the consumer.2 Under
System I processing, one simply does not take the time and effort needed
to clearly process the fact that the bargain button includes with it a bundled
deal with another vendor, or even a second commitment with the initial
vendor. One would not even expect that this is indeed the case. System I
processing in such a case is encouraged because the consumer is attracted
by a vibrant high chroma button coupled with the discount offered and
clarifying print often so small that an eagle would need contact lenses to
see it.
B. System I Processing
Every day as we go about our purchase activities and simply carry
on with our lives, we are exposed to hundreds of advertisements and
promotions.3 Hence, we absorb and store a huge amount of data and
images in a way that is beyond our conscious awareness or control. While
this information is not highly processed, it is argued that with repeated
exposure, certain connections and associations will be made. Consistent
with System I processing, consumers who are exposed to advertising under
low involvement conditions (i.e., one in which the consumer has little or
no motivation to process or learn the material) are typically persuaded to
purchase through a “peripheral” route to attitude change, which occurs
NOT because the individual has carefully considered the pros and cons of
an issue or a product purchase, but rather because the object is associated
2 Robert Meyer. “Prepared statement of Robert J. Meyer.” Presented to the United States
Senate Committee on Commerce and Transportation. November 17th (2009).
3 CBS News, September 17th (2006).
with positive or negative cues (e.g., they liked the music contained in the
advertisement, possibly they liked the celebrity associated with the brand,
or even the images shown in the advertisement).4
In fact, processing an advertisement or making a purchase decision
under low involvement conditions can be rather dangerous since such
conditions result in the consumer suspending the typical intensity and
critical perspective with which they traditionally view an advertisement,
and therefore they can be more susceptible to the sales pitch. Indeed, this
suspension of criticism in advertising is present in the practice of product
placement, where brands are placed within the context of movies.5 Seeing
Halle Berry drinking your favorite beer or Daniel Craig driving the new
Aston Martin in the most recent James Bond flick “Spectre” works wonders
for awareness and sales, just ask the Hershey company about “Reece’s
Pieces,” and the impact that placement in the movie E.T. had on sales.6
But System I processing can be found in many other consumer purchase
contexts. Consider the concept of price bundling. This is the situation where
a manufacturer puts several products or services together into a single pack-
age and typically sells the “bundle” for a price that is lower than if one were
to purchase the items individually. We have all come across a price bundle
when we enter a McDonald’s restaurant, where we are typically asked if we
want the “combo” of a Big Mac, large fries and a drink. When we purchase a
bundle of items, we typically are the ones who are asked whether we want it
(such as in the McDonald’s example typically by the cashier), and we often
assume that the elements of the bundle go together nicely, such as shampoo
and conditioner, and are offered at a discount in combination. But are there
any situations where it was never your intent to purchase a bundle, and yet
4 Petty, Richard E., John T. Cacioppo, and David Schumann. “Central and peripheral routes
to advertising effectiveness: The moderating role of involvement.” Journal of consumer
research 10(2) (1983): 135–146.
5 Gupta, Pola B., and Kenneth R. Lord. “Product placement in movies: The effect of
prominence and mode on audience recall.” Journal of Current Issues & Research in
Advertising 20(1) (1998): 47–59.
6 You could also ask Mars (who were asked first) about their decision not to use M&M’s in
the film but I suspect that they would not be very happy to talk about it!
that is what you leave the store with? It’s easy to imagine this happening at
McDonald’s but could this possibly happen for a relatively expensive good?
Consider the following example, I enter a department store (that shall
remain nameless) looking for a pair of pants, and I see bright red tags
indicating that a sale is going on. Those bright red tags, serving as a
cue, should be enough to get your heart pumping if you are even one-
tenth the shopaholic that I am. You notice that the terms of the sale are
as follows . . . you can buy any wool pants on a given rack filled with
designer names (e.g., Michael Kors, Ralph Lauren, Calvin Klein, etc.)
for the “discounted price” of $99.00. Next to this rack, a wide range of
sport-coats in identical designer names are offered for $199.00, also “on
sale” . . . but you can get the best deal of all, in that you can choose a pair of
pants from one rack AND a sports-coat from the second rack for the super
sale price of $2297! Now what is going on here? Has the department store
gone crazy, have they missed something? Does someone not know how to
add? After all, if the pants cost $99 and the sports-coat costs $199, the total
should be $298 not $229 for the combo. If you are quick at math, and even
if you are not, you soon come to realize that you better act fast and buy
the pants and the sports-coat, and take it to the cashier who is first to admit
when questioned that they hated first-grade math!
Now before you do this, let’s wait a moment and catch our breath before
we purchase. Say that I really had absolutely no need to buy the entire suit
when I first entered the store and that I simply came into the store to buy
a pair of pants. Would I be able to resist the purchase of a suit? Well the
typical consumer would cash in on this super deal by purchasing a sports-
coat AND a pair of pants for $30.00 more than the sports-coat alone ($229
versus $199), even if they only initially had the purchase of a pair of pants
in mind. That is, the department store got the consumer to purchase the
bundle (a suit), in place of simply buying pants because the buyer could
not pass up the opportunity. What happened was that the consumer lost
7 Note that with this deal you are also given a coupon for $25.00 off your next purchase at the
department store, effectively making the sports-coat purchase and the pants and sports-coat
purchase almost identical in cost to the consumer.
focus on the pair of pants they wanted to buy, and instead focused on the
relative advantage of purchasing pants and sports-coat for only $30.00 more
than purchasing a sports-coat. In other words, you, the consumer, bought
a bundle without the initial intention of doing so simply because you were
driven almost by instinct to get the bargain for the set of items relative to
the single item that you initially intended to purchase. Essentially, the seller
switched your frame of reference from a pair of pants to a comparison of
the sports-coat versus the pant/sports-coat combination.
In the book “Predictably Irrational,” Dan Ariely describes a similar
type of offering where the Economist proposed a 1-year subscription to
the Economist.com for $59.00, a print subscription for $125.00, and a
print and web subscription for $125.00. The author notes that when he
studied the consumer’s preference among the three choices, by asking 100
students at the Sloan School of Management at MIT their choice, 84 chose
the web and print subscription and 16 chose the web subscription alone.
Importantly, not one student chose the “decoy” or inferior choice of the print
subscription for the same price ($125.00) as the print and web subscription.
However, when Dr. Ariely removed the inferior choice option and gave a
different set of students a choice between the web subscription alone for
$59.00 versus the print and web subscription for $125.00, the choice was
overwhelmingly in favor of the cheaper web subscription alone, in fact this
option was chosen by 68% of those surveyed. What is amazing is that by
simply removing the option chosen by no one (i.e., the print option alone
for $125.00), preferences went from 16% choosing the web subscription to
68% choosing this option. The reason for this result, according to Dr. Ariely,
is that consumers see choice options relatively, that is the presence of an
inferior option led to the choice of the option which was superior, even
though a cheaper option was available.
What is important to consider here is that options which seemingly
are not valued by the consumer can ultimately influence choice; this effect
can also, in some cases, lead to the purchase of more items than one had
originally planned. That is, in both cases, a bundle was purchased (a suit
and a combined print and web offering), in place of a single item. Clearly,
the consumer had been manipulated.
System I processing and decision-making is oftentimes described as
low effort, rapid, associative, contextual and automatic. Imagine you are
visiting a city that you have little knowledge of, and are getting hungry for
lunch. Would you go into the restaurant that is extremely crowded with a
wait time, or the one across the street that has no one inside, with the only
people waiting being the waiters who are waiting for customers to enter.
The answer of course is that you would dine at the crowded restaurant under
the naive belief that if many people are standing outside to get in, the food
must be great. You would rather wait 1 hour to get a table than 1 hour in the
emergency room to have your stomach pumped! The belief that the busier
a restaurant is, the better the food, can be classified as a “naive belief”
which is typically used as a decision-making heuristic under System I
processing.
Naive beliefs are informal, common-sense explanations that consumers
utilize in their everyday lives to make sense of their environment and often
diverge from formal, scientific explanations of what actually happens.8
Such beliefs are used because they require little cognitive effort and can
be accessed quickly and applied easily to almost any decision-making
situation. Indeed, recent research has explored how a variety of naive
theories are used as the basis for consumer inference.9 For example,
research recently documented the fact that consumers assume that when
a firm is profitable, their advertising is more credible and therefore is
more favorably evaluated. This is possibly the case because when a firm is
profitable, the naïve belief held by consumers is that the firm must produce
quality goods which sell to a relevant market and are therefore positively
8 Deval, Hélène, Susan P. Mantel, Frank R. Kardes, and Steven S. Posavac. “How naïve
theories drive opposing inferences from the same information.” Journal of Consumer
Research 39(6) (2013): 1185–1201.
9 Labroo, Aparna A., and Anirban Mukhopadhyay. “Lay theories of emotion transience and
the search for happiness: A fresh perspective on affect regulation.” Journal of Consumer
Research 36(2) (2009): 242–254. Raghunathan, Rajagopal, Rebecca Walker Naylor, and
Wayne D. Hoyer. “The unhealthy = tasty intuition and its effects on taste inferences,
enjoyment, and choice of food products.” Journal of Marketing 70(4) (2006): 170–184.
Steinhart, Yael, Michael Kamins, David Mazursky, and Avraham Noy. “Effects of product
type and contextual cues on eliciting naive theories of popularity and exclusivity.” Journal
of Consumer Psychology 24(4) (2014): 472–483.
evaluated. This favorable belief about the product therefore filters down to
the consumer’s perceptions of the firm’s advertising.10
But consider the following statements: “If you want to be perceived as
someone who knows how to dress well, wear what everyone else is wearing;
you can’t go wrong by following current trends in fashion,” versus “You’ll
be seen as a fashion maverick if you wear a unique dress, and you will be the
envy of everyone at the party.” These statements represent naïve theories of
social acceptance and provide seemingly contradictory messages about the
desirability of wearing a particular garment. The first statement implies that
wearing what others wear leads to a favorable impression among interested
others. In the latter example, not wearing what others wear leads to a
favorable impression among interested others. So whose advice should you
take? The answer of course is it depends . . . It turns out that my colleagues
and I conducted an experiment regarding the “best” dress to wear to the
prom among high school seniors. We asked, should you choose the unique
dress that no other girl is wearing, therefore making a fashion statement of
individuality at the ball, or should you wear the dress that is in fashion and
show others that you simply can wear it better and are also part of the group
in the know? Those participating in the experiment were shown each type
of dress. But we were a little sneaky than simply just asking this question;
you see, before the women had to make their choice we primed them with
information in the form of a paragraph that they were asked to read. We
simply had them read about either the importance of conforming to norms
or the importance of being a trailblazer.
Quite simply by “priming” potential consumers by having them read a
short paragraph about either the benefits of product uniqueness or product
conformity, we expected to influence preference of choice. To make things
more interesting and to be tricky, we even decided not to have the paragraph
discuss dresses or clothing at all but rather a sports car. In the “popularity”
condition, we described the model Mustang in 2001 as having sold 500,000
units over the past year and in the “uniqueness” condition the car was said
10 Posavac, Steven S., Michal Herzenstein, Frank R. Kardes, and Suresh Sundaram. “Profits
and Halos: The role of firm profitability information in consumer inference.” Journal of
Consumer Psychology 20(3) (2010): 327–337.
to only have been made in a limited edition of 5,000 units available similar
to the 1968 Mustang made by Ford in 2001 commemorating the 1968
movie “Bullitt” starring Steve McQueen. The results of the experiment were
fascinating. Those exposed to the popularity cue chose, by a vast majority,
the current popular dress to wear to the prom, whereas those exposed to the
limited edition cue (The “McQueen” cue) decided by a vast margin to wear
the unique dress. Again, evidence is provided here that one’s own naïve
theories which guide one’s own decisions can be manipulated by a simple
exposure to information that may not be even directly related to the choice
decision one is facing. How fickle we humans are.
Now, this chapter has not addressed System II Processing, which
involves an effortful, controlled and slower way of thinking involving
deliberative and reasoned rules. But as we shall see in this book, even
System II can be subject to cognitive biases in the marketing realm even
though such thinking is presented as dominated by “reason,” as opposed to
emotion.
b2530 International Strategic Relations and China’s National Security: World at the Crossroads

Chapter 3
Cognitive Biases and System II Processing
A. System II Processing
While System I has been described as “automatic processing,” System II
is best characterized as “effortful.” While System I processing has
been characterized as “emotional,” System II is known as “logical.”
Other characteristics of System I processing is that it is “subconscious,”
and “stereotypic,” whereas, respectively, System II is known as being
“conscious,” and calculating (see footnote 17 of Chapter 1). The subtle
message conveyed to those who would compare both systems of cognitive
mechanisms that individuals use to process information and make important
decisions is that System II is “better” because it is logical while System I is
emotional. That is, one would generally believe that if they were to utilize
System II processing as opposed to System I when facing a decision choice,
the outcome would be more optimal when using the prior system. For you
baby boomers out there, this is equivalent to saying that the decision choice,
made in times when the Enterprise is threatened, should be made by Mr.
Spock as opposed to Captain Kirk. If Spock makes it, then the decision
is likely to be more logical, well thought out and, in a word, better! But
if Kirk made it, you can be sure it came with eye candy! But hold onto
your horses, just because one thinks logically, doesn’t mean that one thinks
more effectively. In fact logical thinking and the use of System II processing
subjects all of us to cognitive biases. Consider the following.
I was recently walking down Rue Rambuteau in the third arrondisse-
ment (Marais) section of Paris when I came across a bistro by the name
of Camille (pronounced Cam-ee). TripAdvisor gave it an excellent rating
25
of 8.7/10, and while the prices were a bit expensive the entrées seemed
irresistible. Consider such gourmet entrée choices as Tartare de Boeuf, if
you are into eating raw chop-meat, or Filet Bernaise if you are into fish or
even Magret de Canard for those duck lovers out there, all for 30 Euro’s
or less. In fact, why not have the appetizer of Escargots de Bourgogne as a
“starter,” if a taste of snails whets your appetite for the entrées to come. You
could finish it off with Creme Brulee Maison or even Moelleux au Chocolat
Maison topped with a fresh scoop of vanilla ice-cream from Normandy. My
wife and I indeed partook in an extravagant dinner at Camille, and while
our stomach was filled with exotic tastes my wallet was emptied, as the
total bill with wine came to over 200 Euro’s ($250 in American dollars
at the current exchange rate). While this is not necessarily expensive for
dinner at a quality bistro in Paris, it was much more than I intended to pay
when I first sat down to eat as I am more familiar with that Scottish gourmet
restaurant in America called McDonald’s.
Now, the next time we found ourselves walking down the same street
(as our hotel was nearby), we noticed a small restaurant called “Suzette”
right next door to Camille. You guessed it, they served Crepes, only crepes,
as the name suggests. So my wife, seeing Camille and remembering the
expensive meal we had recently eaten, suggested that we save money and
calories this time by eating at Suzette as they served various main course
crepes in addition to delicious dessert crepes (which in theory we could
avoid . . . but only in theory). After dinner, we decided to have coffee at
Camille and I got into an interesting discussion with the head waiter. I asked
him, “aren’t you upset that this crepe place seemingly moved right next
store to you?” He answered, “Why should I, we own Suzette also!” He
explained that the owner of both Camille and Suzette in Paris (as well as
two other local restaurants with women’s names)1 intentionally positioned
Suzette next to Camille so that potential diners who had tried one or who
simply were aware of both restaurants, would then be attracted to the other,
1 The owner also believes that naming a restaurant after a woman, attracts men to eat at the
restaurant. It is not surprising that this particular owner is French, think Pepe le Pew. In
addition, the owner of Camille admitted that “Camille” is not someone he knows, wants to
know, or has known.
Cognitive Biases and System II Processing 27
seeking either a simpler or more complex meal and having the choice right
next store! Clearly, this tactic, known as a framing bias and discussed in this
Chapter, resulted in our eating at BOTH restaurants, and come to think about
it, I’m supposed to be the guy who knows when marketing manipulation is
occurring! This manipulation was at least delicious.
This chapter introduces various biases in human judgment which if
left unchecked serve to lead the consumer to make purchase decisions that
seemingly of their own choice are actually determined by some external
invisible forces. Such decision options may be far from being optimal or
even rational. In the academic literature in the fields of Social Psychology,
Psychology and Sociology, many different biases have been identified;
however, not all impact purchase decisions and not all can be covered in
one book. Therefore, I have decided to select those cognitive biases which
are both relevant to purchase behavior and of a nature that the consumer,
once aware, can take action to counter the bias. A discussion of these biases
now follows.
B. The “Anchoring Effect”

Let’s begin with our first cognitive bias, a phenomenon called “anchoring,”
particularly numerical anchoring. There is a significant amount of research
in the marketing literature that shows that consumers are influenced in
their decision-making by arbitrary numbers they are exposed to before a
purchase decision is made. For example, in a study conducted at Stanford
University, subjects were shown four products and asked to state the
highest price at which they would be willing to buy a specific product.2
The experimental sequence proceeded as follows. First, they were shown
pictures and descriptions of each of the products. They were then told
to enter the last two digits of their social security number and asked the
following two questions about this number: (1) “Now assume that the last
two digits of your SSN are a price in dollars. Would you be willing to pay this
2 Simonson, Itamar, and Aimee Drolet. “Anchoring effects on consumers’ willingness-to-

pay and willingness-to-accept.” Journal of Consumer Research 31(3) (2004): 681–690.
price for this [toaster]? Yes or No?” and (2) “What is the highest price you
would be willing to pay for this [toaster]?” Results showed on average across
the four product categories considered, that the group of subjects whose last
two social security number digits exceeded “50” were willing to pay over
a 50% premium in price to those whose last two digits fell below “50.”
Now what is most surprising about this effect is that, presumably, the
last two digits of one’s social security number should have little predictive
value regarding the price one would pay for a toaster, phone, backpack or
radio headphone, yet the findings here are undeniable, and were replicated in
four experiments by the authors’ and in many different academic treatises.3
So, does this mean that if you are planning to purchase a new car, and
the salesperson asks you to write down the last five digits of your social
security number (mine is 92721),4 that you will actually use this anchor
in terms of your willingness to pay for a car? If, so, then I am in trouble,
since my number is a bit on the high side. What exactly is going on here?
According to Simonson and Drolet (2004, p. 688), “value uncertainty makes
consumers more susceptible to external influence, including influence by
arbitrary anchors. Since personal value uncertainty plays a greater role
in willingness to pay judgments, one can influence the elicited maximum
purchase prices by causing consumers to consider arbitrary price anchors.”
But arbitrary anchors may not be the biggest problem for the consumer.
Consider the fact that in many stores when purchasing a durable good,
the consumer is faced with a tag on the merchandise which typically says:
Regular Price: XXX; Sale Price: X. The anchoring effect suggests that
consumers will use the regular price given as a strong reference price or
anchor in deciding whether or not to purchase the item.5 However, the
3 Ariely, Dan, George Loewenstein, and Drazen Pralec. “Coherent arbitrariness: Stable
demand curves without stable preferences.” Quarterly Journal of Economics, 118(1) (2003):
73–105; Wilson, Timothy D., Christopher E. Houston, Kathryn M. Etling, and Nancy
Brekke. “A new look at anchoring effects: basic anchoring and its antecedents.” Journal
of Experimental Psychology: General 125(4) (1996): 387.
4 Of course dear reader, these numbers are made up, I was born in New York City after all!
5 Kamins, Michael A., Xavier Dreze, and Valerie S. Folkes. “Effects of seller-supplied prices
on buyers’ product evaluations: Reference prices in an Internet auction context.” Journal
of Consumer Research 30(4) (2004): 622–628. See also Liefeld, John, and Louise A.
Heslop. “Reference prices and deception in newspaper advertising.” Journal of Consumer
Research 11(4) (1985): 868–876.
best remedy, to inoculate yourself from the effect of any anchor is to shop
around and gather significant information about what you are purchasing,
so that you know in advance what is a reasonable and not-reasonable price
offer. That is, just because a product is claimed to have a “regular price”
of XXX at the store you are shopping at, it does not mean that this is the
“regular” price at any other store . . . in fact, what is “regular” supposed to
mean anyway?
Consider that today, as I write this paragraph I visited Macy’s for their
“Last Act” sale, which purportedly means that this is the last chance that the
consumer has an opportunity to purchase these items at Macy’s for ANY
price. Each item has the original tag on it from the manufacturer, along
with a discounted sticker indicating the Last Act price. But if the consumer
looks at the manufacturer’s suggested retail price (MSRP) as their anchor,
in comparison to the Last Act price, they may be making an error for the
cases in which the item is NEVER sold at the MSRP.
You are NOT anchored to the anchor given . . .please remember this. For
example, did you know that on Amazon, if you are looking for a specific
pair and model of shoes made by Florsheim for example, that the price
varies by shoe SIZE? So, why not pay say $30 less to get the shoe in size
13 instead of size 12? Just buy yourself a Dr. Scholl’s insole “et voila!”
you have saved a bundle of money? This example, however, may not work
in reverse, as frankly, I’d think about it if you were to buy size 12 instead
of size 13. Trips to the podiatrist to fix bunions and corns are much more
costly than $30. Also, if you are traveling from say Los Angeles to New
York City, why just focus on JFK when there might be incredible deals
available going to LaGuardia or Newark? In fact, there may be a cheaper
flight to Boston! But you are not going to Boston you say, what kind of
booking is this anyway! Well, what if I told you that the flight makes a stop
at JFK en route to Boston and is $150.00 cheaper than a non-stop to JFK?
Now does it sound interesting to be a bit creative in your bookings? Again,
flying from Los Angeles through Anchorage to get to New York might not
have the same attraction.
Consumers may also anchor on a specific attribute in a purchase
decision, losing focus of a significantly more important attribute which
in the long run may carry much more weight and save you a lot more
money. Consider, for example the points offered in the servicing of a
loan. If you reduce say a 5%, $200,000 loan by ¼ point of interest, by
paying $2,000 up front (“1 point” in the lingo of the loan trade), you can
save $8,160 in interest over the length of the loan. Therefore, a strategy
designed to avoid paying “points” up front may lose the forest from the
trees, especially if you plan to hold on to your home for a longer period
of time.
Finally, it seems that the old familiar anchor of a 15% tip when eating
at a restaurant has disappeared altogether. As the reader knows, I am a
“quant” type of person. I have always been quick with numbers and have
tried to avoid calculators like the plague. In fact, I take pride in my ability
to calculate the waiter’s tip in my head quickly and exactly . . . until bills
came with suggestions of tips ranging from 15% on the low side to 20%
on the high side, and sometimes even higher in certain restaurants (see
Figure 1).
In other words, all of a sudden, a 15% tip, which had been standard, is
now considered, at least by this receipt, as not even on the radar, so now
the scrooge option is the “tiny” 18% tip. So, am I now supposed to be
ashamed if I give the server 15%? Even worse, the exact tip at each of these
rather high percentages is now pre-calculated for your bill. So, if my bill
for dinner comes to say $56.48, the tip of $8.47 (at 15%) and $11.30 (at
20%) is already indicated, as are other amounts. So even if I wanted to tip
the server a lower amount, they are already instantly aware of it. Moreover,
I find myself relying on these tip calculations (because I am inherently lazy),
and not thinking about what tip I should traditionally be giving. Whomever
FIGURE 1: Suggestive Check

came up with this idea is a genius — I’ll bet they work at an exclusive
high-end restaurant!6
C. Availability Cascade
What cable station comes to mind when I mention the term “breaking
news”? Could it be . . . CNN? CNN has become so synonymous with the
term “breaking news” that Saturday Night Live (SNL), recently parodied
them during primetime with a CNN pregnancy test that continually gives
you updates in the form of “breaking news” about your pregnancy, without
telling you much of anything. The reason for an association between the
term CNN and “breaking news” is the degree to which it is repeated on the
television screen and by each of the commentators during the day, consistent
with what has been called an “availability cascade.”7
An “availability cascade has been defined in the literature as “a self-
reinforcing process of collective belief formation by which an expressed
perception triggers a chain reaction that gives the perception of increasing
plausibility through its rising availability in public discourse.” (Kuran and
Sunstein, p. 683). In simple terms, this means that the more one repeats a
statement, the greater the likelihood that it will be accepted as gospel. But
by continually labeling every bit of news as breaking news (especially when
the news program is repeated multiple times on a given night), ultimately
relates in it being ignored or, worse yet, being labeled as “Fake News,” This
is the downside of such a strategy. That is, if everything is labeled as game
changing, ultimately it is ignored or characterized as fake. You know the
old proverb, if you cry wolf too many times . . .
To defend against making a false inference as a function of this bias,
one should do their own research and try to consider the source of one’s
information, as well as investigating what competing sources say about
the supposed “fact” under consideration. For example, a company stating
6 I do have an interesting idea on how to avoid calculating the tip while tipping the
“traditional” standard of 15%. Simply, wait for the time when a 30% tip is pre-calculated
on your bill, then merely cut it in half, or if you want to be cheap about it, presently you can
simply cut the suggested and pre-calculated 25% tip in half.
7 Kuran, Timur, and Cass R. Sunstein. “Availability cascades and risk regulation.” Stanford
Law Review 51(4) (1999): 683–768.
that it is the leading seller of a drug designed for a specific usage does
not necessarily mean that it is the “best” drug for the consumer. My own
research conducted on pioneer brands and market leaders generally showed
that consumers tend to believe that if something is the market leader then
it must be the best.8 If not, it would not have sold so many products. But
if a new generation computer (or drug designed for a specific disease) is
just recently on the market, it could boast the best quality/effectiveness
but actually not yet have the greatest sales simply because it is new to the
market and not yet known, and so few people have purchased it. So, one
should avoid using simple heuristics (rules of thumb) as the sole source of
information in decision-making.
D. The Bandwagon Effect (Herd Behavior Bias)

If you have ever bid on goods online through eBay, sometimes you will
come across two offerings say for a DVD of a new movie, offered by the
exact same seller at the same time and for the same starting price of say a
penny. Over time as the auction matures you may notice that one of these
auctions is getting a lot of bids and the price is rising, but the other identical
listing is sitting there without a bid being placed. It’s as if it has been secretly
contaminated by some hidden disease, and that anyone who bids on it thinks
that by touching the keyboard of the computer and placing a bid on the item
will for some reason, send themselves to the hospital. Indeed this very event
was recorded many times by researchers from SUNY University at Buffalo,
finding illogical purchases by consumers that could not be explained by the
economist’s concept of the “rational man.”9 That is, behaviors observed on
eBay were hardly rational.10 What we are discussing is a real-life example
of the bandwagon effect or what is more descriptively called “herd behavior
bias.” That is, consumers have a tendency to do or believe things mainly
8 Kamins, Michael A., Frank H. Alpert, and Lars Perner. “Consumers’ perception and
misperception of market leadership and market pioneership.” Journal of Marketing
Management 19(7–8) (2003): 807–834.
9 I hate to say it, but I will . . . there is little in the world explained by the economist’s concept
of the rational man.
10 Dholakia, Utpal M., and Kerry Soltysinski. “Coveted or overlooked? The psychology
of bidding for comparable listings in digital auctions.” Marketing Letters 12(3) (2001):
225–237.
because many others do or believe the same thing. This bias is known as
the “wisdom of the masses.”11
Many bidders, for some strange reason, would be hesitant to bid on the
identical item that has no bids, simply because no one else has bid on that
item. But how can that other item be inferior to the one that is garnering
lots of bids, if it is the identical item, from the same seller, and indeed uses
a stock photo to illustrate what is being sold? Yet, you hesitate and finally
place a bid on the more popular identical twin, and in the end, pay a high
price and feel contented about it. Did you do this because of a sense of
belongingness, that is, you believed that the masses knew something about
the popular identical twin that caused it to be embraced, while the other
twin was shunned? It would be hard for me to believe this since the items
could be identical new Play Station Consoles, how could one be “good”
and the other “bad” if they weren’t even used? The better explanation of
our behavior is that we as humans can and do take the path of the other
lemmings and seemingly jump off the cliff, following the pied piper as he
leads us to the edge. That is, there is an inherent belief among our species
that some external invisible force knows the truth and one can gain access
to that truth by observing mass behavior which flocks to it . . . good luck.
Consider the concept of market leadership, discussed above. When you
buy the market leader, why do you do so? Many people will tell you that if
it is the choice of the masses, so it must be the best! But there is absolutely
no evidence that market leaders excel in actual measured quality over other
brands. What they do excel in, however, is sending signals that they are the
best in perceived quality since the consumer typically has the naive belief
that if many people are buying it, then it must be the best in quality. Indeed,
my own research and that of others shows this.12 This implies that once a
brand becomes a market leader, it is somewhat difficult to lose this position
11 Surowiecki, James. The Wisdom of Crowds. New York: Anchor Books (2005).
12 Alpert, Frank H., and Michael A. Kamins. “An empirical investigation of consumer
memory, attitude, and perceptions toward pioneer and follower brands.” The Journal of
Marketing 59(4) (1995): 34–45; F. Ferguson, Andrew, Jere R. Francis, and Donald J.
Stokes. “The effects of firm-wide and office-level industry expertise on audit pricing.” The
Accounting Review 78(2) (2003): 429–448; Hellofs, Linda L., and Robert Jacobson. “Market
share and customers’ perceptions of quality: When can firms grow their way to higher versus
lower quality?” The Journal of Marketing 63(1) (1999): 16–25.
because consumers blindly attribute superior quality to it. This is the reason
may brands lower price in order to gain market share and then bask in the
sunlight of market leadership.
But what does all of this discussion mean to you? In terms of eBay
bidding, it suggests that you should be brave and take the “risk” of bidding
on the identical item that has received fewer bids, I assure you it is not
contaminated. In addition, try to pull yourself away from the magnet type
attraction to do what others are doing, and think for yourself. In the stock
market, there is a famous phrase which a select few adhere to when asked
how they made money in the market: “I bought when others sold.” Simply
stated, don’t follow the lemmings.
E. Base Rate Fallacy

Imagine that a new company called Cardio-Scan has invented a new
scanning device that can tell today whether or not you are an exceedingly
strong candidate to have a fatal heart attack within the next year. Assume
also that the MAK HMO which owns the new scanner serves a specific
local community which is actually inhabited by 100,000 individuals (1,000
people who have such a poor cardio condition and 99,000 people who do
not) and that you are one of the individuals who are served by that HMO.
Assume further that the scanner is not perfect and suffers from two potential
problems. The first, called a Type I error or “false negative,” occurs when the
scanner result is suggestive of a good heart and an extremely low potential
of a fatal heart attack when in fact there is a lot to worry about. Say this
happens 0.5% of the time. The second error, called a Type II or “false
positive,” occurs when the scanner result is suggestive of significant cardio
damage, predictive of a pending fatal heart attack, when in reality there is
little or nothing to worry about. Say this happens 2% of the time. Now we
can debate which error is worse, being told you have a great heart and bingo
you are dead from a heart attack, or being told that you have a poor heart
but that you are actually in great health. I’ll take the latter please, that way
I’m still alive but worried so much that I’ll probably die from a nervous
breakdown rather than a heart attack!
But here is the key question, suppose that your doctor says that you
should undergo a Cardio-Scan simply for health maintenance purposes but
you have had no shortness of breath and in fact you feel fine. You agree to
take the scam, I mean scan, and amazingly the insurance company signs
off on it. You go in to take the scan and a week later your doctor calls to tell
you that the result came back . . . positive, showing the potential that you
have significant heart disease. In other words, is it time to get the bucket
list in order? What changes should you make to your life now? Maybe
you should quit your job, take out your life savings, and go to Tahiti for
3 weeks? Should you throw caution to the wind and start eating all of those
fatty foods and sugary treats which you avoided because you were worried
about being overweight and having the onset of diabetes and heart disease
or should you begin to make protein shakes with the Magic Bullet with lots
of blueberries, cranberries, bananas and other anti-oxidants?
Well, before you do all of that, let’s ask, what is the probability that
you have heart disease bad enough to kill you given that the Cardio-Scan
result is positive? A quick calculation off the top of your head says that
there is a 98% chance that you are going to die of heart disease in the next
year. Why? Because, only 2% of the time does the scanner result come
back positive AND YOU DON’T HAVE HEART DISEASE. That means
that 98% of the time it comes back positive AND YOU DO HAVE HEART
DISEASE. So, the odds are 49 to 1 against you that you can successfully
plan to go to next year’s Super Bowl or even buy green bananas. But wait a
minute, in your haste, you have made a BIG miscalculation. That is, there
is a difference between the number of positive tests per say 100 scans of
gravely sick people versus the number of healthy people per 100 positive
scans.
Consider the following, if the 100,000 people who are served by
MAK HMO were to get a scan, of the 1,000 people who have significant
heart disease, 995 would get a positive test result indicating significant
heart disease (0.995 × 1,000). Of the 99,000 people who DO NOT have
significant heart disease, approximately 1,980(0.02 × 99,000) would get a
positive test result. Therefore, the true probability that you (who received
a positive test result) indeed have heart disease is 995/995 + 1,980 or
approximately one in three. Maybe you can make reservations for the Super
Bowl and buy green bananas after all! If this is still not clear after these
calculations, consider the following fact. There are two ways that the scan
can be positive, either you have heart disease and it comes back showing that
you do, or you do NOT have heart disease and it comes back showing that
you do. We have shown that approximately twice the number of people who
have a “positive” scan showing the presence of heart disease are actually
healthy versus sick. When you focus on the statistic that the scanner, detects
heart disease correctly 99.5% of the time for those who are ill, what you are
leaving out in your calculation is the percentage of time it does the same
for those who are healthy, and there lies the bias.
Another example of the base rate fallacy can be seen as follows. Suppose
that Irene is 31 years old, single, out-spoken and very bright. Let’s say
that she majored in social work at UC Berkeley and participated in many
student demonstrations. As a student, she was deeply concerned with issues
of discrimination and social justice and also participated in anti-nuclear
demonstrations. She was a strong supporter of Hillary Clinton in the last
election and despises President Trump.13 Now, is she more likely to be
a bank teller or bank teller and active in the feminist movement? Most
individuals would argue that she is more likely to be a bank teller active in the
feminist movement because she appears to be left leaning in her political and
social interests. However, looking at this problem mathematically instead
of socially, one notes that the probability that she is BOTH a feminist added
to the requirement that she ALSO be active in any movement clearly has to
be lower than her simply being a bank teller. That is, requiring that a person
fit dual characteristics is more difficult than fitting just one.
So once again, the message here is take the time to process the critical
information before making decisions that impact your life. This “base rate”
bias is highlighted here to give you awareness of some simple and avoidable
errors that we as human decision-makers are exposed to in our daily lives.
F. Choice Supportive or Confirmation Bias

Now here is a bias that will convince you that your choice of wife/husband
or present girlfriend (or both for that matter) is the right choice and that all
13 This is a scenario made famous by Kahneman and Tversky to show decision-making bias
and discussed in Dr. Kahneman’s book titled “Thinking Fast and Slow.” Yours truly added
the UC Berkeley component to the scenario since Berkeley is famous for a liberal bent on
issues and adding into the scenario Hillary and Trump was something I could not resist.
other options were inferior. It may also explain why so few couples matched
on the show the “Bachelorette” and the “Bachelor” end up married, but more
on that later.
This bias is described as the tendency to remember past decision choices
as better than they actually were. In other words, in order to avoid cognitive
dissonance, one tries to elevate the decisions they have made in the past,
and derogate the choice options they did not choose. In a study conducted
at Princeton University, it was found that subjects tended to attribute,
both correctly and incorrectly, more positive features to the option they
had selected than to its competitor, and more negative characteristics to
the competitors.14 The scenarios’ tested included the choice of a college
roommate, who to go out with on a blind date and who to hire in a job
interview context.
The study proceeded as follows in the blind date context. First,
participants were shown a description of two individuals that they could go
on a date with. Each individual was described on 12 personal characteristics
that could be interpreted as either being positive, negative or neutral in
nature such as “comes from California,” “is easily annoyed,” “likes to hang
out and talk.” Then the participant was asked to choose one of the two
to go out with on a blind date. After the choice was made, subjects were
asked what they recalled about each individual. Sure enough, more positive
characteristics were recalled for the individual chosen than the individual
rejected, and the reverse was true regarding negative characteristics where
more were recalled for the rejected choice than the lucky individual who
was chosen to go on the date.15
In terms of marketing decisions, such a bias is indeed problematic
since it suggests that it may be difficult for consumers to change brand
choice if they are biased toward their prior choice and tend to discount past
14 Mather, Mara, Eldar Shafir, and Marcia K. Johnson. “Misremembrance of options

past: Source monitoring and choice.” Psychological Science 11(2) (2000): 132–138; See
also Nickerson, Raymond S. “Confirmation bias: A ubiquitous phenomenon in many
guises.” Review of General Psychology 2(2) (1998): 175.
15 Andy Kauffman once appeared on the show, the “Dating Game,” as Latka Gravas, it is
quite clear that Patrice Burke (the model who he attempted to win a date with), could only
recall negative factors about his character since she rejected him.
un-chosen options. While this favors the maintenance of brand loyalty and is
beneficial to companies (since this bias requires that they make little effort in
convincing their present customers that their choice was optimal), it makes
it difficult for you, the consumer, to break out of established consumption
patterns, unless of course you are aware of this bias.
I must admit that I suffered from this bias. When I first came to
California, I needed to buy an inexpensive reliable car since I was just
starting out as a Professor at the University of Southern California. I never
revisited my choice of a Honda at that time since in 1984, it seemed superior
to all other options out there. But since then, I have bought six Honda’s never
even stepping foot into a competitor’s showroom. As I write about this bias,
and see my footprint all over it, I’m thinking now of daring to explore what
Hyundai or even Volkswagen has to offer when the time comes for a new car,
and for the first time in 30 years venturing out from my Honda man-cave.
Oh, and I almost forgot! Why do “Bachelorette” and “Bachelor”
couples never seem to hook up in real life when the show has ended? It’s
simple, the winner who either rejected 12 eligible bachelors, or 12 eligible
bachelorettes, to arrive at their “dream” match, soon realize when they
leave the tight confines of the show, that there is a BIG world out there,
not in any way restricted to the small subset of humanity being considered
on the show.16 In addition, being famous now, as a “winner,” means that a
lot of that humanity throw themselves at you, which of course expands the
choice set of eligible “beautiful” people who have not yet been rejected by
the winner. When compared to your match on the show, there is typically
no comparison, and the dream couple dissolves into smiles and goodbyes
and sometimes shouts and shoves and of course other choice options.
G. The Denomination Effect

Do you find it hard to break a $100 bill? It turns out that you may not be
alone! A recent study conducted at NYU and the University of Maryland
found in three field studies that consumers, once they make the decision to
spend, are more likely to do so when they are spending an equivalent sum
16 I’ll agree that the “segment” of humanity who participates in the show is usually extremely
attractive.
of money in small bills (e.g., 20 singles) rather than one large bill (e.g., one
$20 bill).17 The authors’ maintain that this effect is due to the fact that large
denominations are psychologically less fungible than smaller ones and that
there is a psychological pain, especially for “tightwads” to spend or break
a larger bill. It seems to me that servers at restaurants are quite familiar
with this effect. Did you ever notice that when your bill is say $14.65 and
you place $20.00 in that leather holder, your change always comes back in
five single dollar bills?18 This of course facilitates the giving of a larger tip
and makes it easier for you to part with your money. But if the bill were
say $32.00, and you pay with $40 in cash, should the waiter return eight
$1 bills to the customer, or a $5 bill and three singles? The standard 15% tip
in such a situation (which we have seen earlier in this Chapter, is no longer
standard), comes to $4.80, so one could argue from the perspective of the
server and that of the “denomination effect” that singles should be given to
the customer since they are easier to part with. But does the presence of a
$5 bill make it more likely that it will be given as a tip for someone who
rounds up the $4.80 (15%) tip to an even $5.00? This is an open question.
If the goal of the economy is to increase the savings rate, then banks
and their ATM’s should be stocked with high denomination bills, since for
most people, breaking such a large bill, as the denomination effect suggests,
is not only psychologically difficult, it is physically difficult. That is, every
time I do so, I feel that the cashier is inspecting me from head to toe like an
eagle with piercing eyes wondering whether or not I am a drug dealer with
access to such large bills. This is my imagination at work. Thankfully, I’m
just an academic who thinks too much about the implications of money and
who can use the automatic pay option at Stop N’ Shop to cash these high
denominations!
H. The Endowment Effect

Richard Thaler, an economist from the University of Chicago observed that
people often demand much more to give up an object that they own than
17 Raghubir, Priya, and Joydeep Srivastava. “The denomination effect.” Journal of Consumer
Research 36(4) (2009): 701–713.
18 Plus 35 cents hopefully.
they would be willing to pay to acquire it. He named this pattern of behavior
the “Endowment Effect.” That is, if you own an object and someone shows
an interest in purchasing it, all of a sudden that object seems to increase in
value. I observed this pattern of behavior one night watching the popular
television show “Pawn Stars,” which follows the various purchases that
Rick Harrison and his family make from the general public who bring
various items into their Las Vegas pawn shop that can range from an
electrical guitar owned and played by the legendary Les Paul (bought from
his nephew for $90,000 and sold on eBay for $110,000) to an American
first edition of the famous classic “20,000 Leagues Under the Sea,” by
Jules Verne (purchased for $9,500, and sold at auction in California for
$10,000). On this particular show, Rick was on the road taking a vacation
and stopping in at other pawn shops to see what they offered for sale. In
one particular shop, he came across an old Samurai helmet dating from
hundreds of years ago. The owner of the shop had a $300 tag on the item
but Rick, being honest, told him that it was worth about $2,500. Rick then
offered him $1,250 for it more than four times the original price tag, but the
owner then asked for $2,000 (more than six times the original price tag).
They finally settled for a price of $1,650. Quite a unique demonstration of
the Endowment Effect I’ll say, as well as the honorable character of Rick
Harrison.
I’ll give you another example, closer to home. Aside from being a
marketing professor who writes books and academic articles from time to
time, I am a full time coin seller on eBay. I have been a coin collector
since I was 7 years old.19 Since my dad was an auctioneer, eBay and the
purchasing and selling of coins using this online vendor has appealed to me
ever since the company was founded. Well one day, while I was looking
through a canvas bag of 5,000 “wheat backed” cents that I purchased
from a dealer (for those of you who are not familiar with this term, it
describes U.S. pennies which have two sheaths of wheat on the back and
were minted between 1909 and 1958), which I occasionally do to pass
19 My original interest in coins was an attempt to scam my father. You see he would not
give me money to purchase baseball cards and I was addicted to them. However, he agreed
to give me coins if I started a coin collection. So of course, I started the one in the largest
denomination (half dollars), which I would then cash in to buy baseball cards.
the time. Incredibly I found a 1914-d penny (minted in Denver) that was in
extra fine condition and worth at the time about $250. My wife told me to
sell it, but I told her that I found it and since I found it, it had sentimental
value and I would NEVER sell it (kind of like Rick’s autographed picture
of the Fonz as featured on one episode of Pawn Stars). Well, recently after
15 years of “advice” from my wife, I decided to put it up for sale on eBay,
but I put a ridiculously “Buy It Now” price of $750.00 (it is worth at max
$500 today), so I could satisfy my wife that I put it up for sale and at the
same time not even come close to selling it, which I didn’t!
So consideration of the Endowment Effect matters, especially when
you are purchasing an item for sale using a “Buy It Now” option on eBay.
Sometimes, buying it for the price the seller offers is not the best strategy
to take, since such an item may include within its price an Endowment
Effect premium from the seller. This is especially true for items that the
seller has had for a long time and could be rare, one of a kind or have
sentimental value attached to them. In addition, since the “Buy It Now,”
price is usually a high number, the anchoring effect, discussed earlier in
this Chapter suggests that you must be careful not to be influenced by it in
subconsciously motivating you to bid high.
I. The Framing Effect (“Money Illusion for Currency”)

Rodney Dangerfield once said: “If you want to appear skinny, hang around
fat people.” That in a nutshell is a framing effect. But let’s focus in on such
an effect in the marketing arena. Frank Luntz, is a well-known strategist
for the Republican Party who subscribes to the belief that: “80 percent of
our life is emotion, and only 20 percent is intellect.” (Frontline interview,
2007).20 His observation is indeed consistent with Tversky and Kahneman’s
(1983)21 research which essentially proposed the existence of System I
and System II processing. He professes that he is much more interested in
how people feel than how they think. With an expertise in doing qualitative
20 The Frank Luntz reference deals with a Frontline video called the Persuaders, where he
makes this exact statement. Frontline is created by PBS.
21 Tversky, Amos, and Daniel Kahneman. “Extensional versus intuitive reasoning: The
conjunction fallacy in probability judgment.” Psychological Review 90(4) (1983): 290–315.
marketing research through carefully examining how people react to various

positioning statements, he is able to identify specific words that trigger a
significant positive or negative reaction in someone when heard. In fact,
Luntz, describes his specialty as: “testing language and finding words that
will help his clients sell their products or turn public opinion on an issue
or a candidate.” (Frontline interview, 2007). He is famous for advising the
Republican Party to use the word “Climate Change” in place of “Global
Warming,” as the former is less negatively emotionally charged than the
latter and hence more likely to be accepted by and influence the general
public. Moreover, he advised that if one wishes to gain support against
an “estate tax” or “inheritance tax,” which was part of the Republican
platform, then one should use the term “death tax” which is more negatively
emotionally laden. Similarly, to deflect the negative perception against
oil drilling, his position is that it is more appropriate to call it “energy
exploration,” than oil drilling (On air interview with Terry Gross on NPR,
2007).22 The strategic selection of the proper way to communicate to one’s
target market is part of the way a message is framed, and the “Framing
Effect,” is simply defined as the ability of an individual to draw different
conclusions from identical information depending upon how it is presented
or who presents it.
Framing effects in marketing are not found simply in communication,
but appear in every element of the 4 Ps inclusive of pricing, product
presentation, promotion and distribution, as well. Take a pricing example
for instance: remember the two authors that we discussed earlier whose
research focused on how hard it is for someone to spend a $20 bill versus
20 $1 bills. Well, they are back again, examining what happens when
consumers travel to foreign countries and have little or no idea of what the
foreign currency is worth. These researchers find that individuals’ valuation
of a product in an unfamiliar foreign currency is biased toward its face
value with inadequate adjustment for the true exchange rate. This leads
to underspending when the value of the foreign currency is a multiple of
an equivalent unit of the home country currency (e.g., the Israeli Shekel
22 Frank Luntz as heard on “Fresh Air” interviewed by Terry Gross, January 9th 2007. PBS
station.
is currently approximately four units to one U.S. dollar), since the item
seems expensive in Shekels. This is especially true when you don’t know
how much a Shekel is worth. For example if a certain dress is available at
Macy’s for $149 but is sold in Israel for 599 Shekels, the mere magnitude of
the perceived price difference (i.e., 599 Shekels versus $149) may prevent
you from buying the dress because it is perceived as high priced in the local
currency. Moreover, overspending occurs when the foreign currency unit is
worth more than the respective home country unit (e.g., the British Pound
is currently 1.36 American dollars). Hence in this situation what one could
buy in America for $20, is approximately “only” 14.7 British Pounds, a
26.5% discount, or is it?
Finally, marketers are clever in the way that they present their model
numbers for the different products in a specific product line offered for sale.
Clearly the BMW 5 series is better than the 3 series. For example, MSRP
prices for the 2018 BMW 3 series begins at $32,955, whereas that for the
5 series when discounted off of MSRP start at $49,950. Is the consumer
given a frame to accept those prices as reasonable through the use of the
model number? For example, the 3 series begins in the low $30,000 price
range since after all it is a “3” series and the first number in the price is after
all a 3. The 5 series, therefore should reasonably charge somewhere in the
$50,000 range to start with and hence a price of $49,500 by this standard
is a clear bargain. Therefore, maybe you are directed to buy the 5 series
and perceive it to be a “deal” simply on the basis of the model numbers as
compared to the price. Again, it depends upon what you anchor on.
J. Escalation of Commitment
This is defined as a phenomenon where consumers continue on with a
decision based upon the extent of their prior commitment, despite evidence
that continuance on the path one is taking is counterproductive. Ken Burns’
recent documentary about the Vietnam war, highlights the fact that despite
believing that the war was lost, both President Kennedy, and particularly
President Johnson, continued on with the war in the slight hope that with
even more assigned soldiers, it could be won. But let’s get back to marketing.
Consider, a bidding situation on eBay where your bid presently represents
the highest bid for an item. Just a couple of hours before the close of the
auction, a competitor places a bid that exceeds yours. Despite the fact that
you swore that you wouldn’t place a bid on the item that exceeded your
prior bid, you resent not being the highest bidder and place another bid to
contest the competitor. Of course, the competitor then tops you and you top
him and so on and so on. At a certain point, continuing to bid for the item
becomes counterproductive since the amount bid will exceed the item’s
value. However, given the history of the auction and the battle versus a
specific competitor you refuse to give up and you win.23 But by winning
at a price higher than the value of the product you may have vanquished
the competition, but you have lost the war. In fact, you have achieved what
Thaler (1988)24 calls the “Winner’s Curse.”
The way to avoid this phenomenon is to decide in advance what the
value of an item is BEFORE you even place a bid in the auction, and, of
course, try to NOT let your emotions get the better of you! This strategy of
placing your maximum bid in advance is called “setting your reserve.”
K. Sunk Cost Fallacy

Believe it or not, your decisions are tainted by the emotional investments you
accumulate, and the more you invest in something, the harder it becomes
to abandon it. I hate to use this example because it is one of the most
difficult decisions I have ever had to make in my entire life. It involves my
third son, Mister Magoo, who happens to be my youngest son, but also my
oldest son. You see Mister Magoo is 15 years old and a pedigree Wire-Fox
Terrier. So his 15 years of life, represent 105 in our lifetime, so he is a pretty
old geezer! Recently, he has been diagnosed with cancer which is not his
biggest problem. His major illness is DM (degenerative myelopathy which
is the doggie equivalent of Lou Gehrig’s disease and ultimately results in
total paralysis, the stage at which he is presently). The decision of course,
is when to end his life and my wife and I are torn between loving him too
much and doing what is required and put off the inevitable almost on a daily
23 On eBay each bidder or participant chooses an ID which represents them when bidding
for an item or selling an item.
24 Thaler, Richard H. “Anomilies: The Winner’s Curse,” Journal of Economic Perspectives,
2(1) Winter (1988): 191–202.
basis. Yesterday, he did not eat in the morning but when it came time for his
dinner, he worked up a phenomenal appetite. So, when I saw he was eating
everything in sight, I decided to give him some Reese’s Dark Chocolate
Peanut Butter Cups, as well as half of the steak that was on my plate since
given his condition, he was not going to get many opportunities where he
felt well enough to eat such things nor to eat period. I tried to hide all of this
from my wife, but when she caught me, she screamed . . . “What are you
giving him to eat, it’s bad for him, he’s liable to get Diabetes!” I felt ashamed
for a second, but then realized, why does she care about his getting diabetes,
when we face a daily decision regarding when to end his life? It then dawned
on me that thinking like this in a sense reflects a sunk cost fallacy. That is,
we are so emotionally attached to him as a family member that we ignore
the short run reality which stares us in the face, and make decisions as if
his life horizon was extended long into the future. Eating a half pound of
steak and Reese’s Peanut Butter Cups can do little harm in the long run, if
that long run only extends to tomorrow or a few weeks from today.
Most importantly, this example shows us that the sunk cost effect can
impact your view of decisions that determine the future path that you take,
and financial decisions are not immune. William O’Neill, founder and
publisher of the financial newspaper “Investor’s Business Daily,” always
states that one should not fall in love with a stock or hold the stock beyond
a certain level of loss. Holding a stock because of the fear that a paper loss
will then become a “real” loss is reflective of what is relatedly termed a
“Black Hole Bias.” That is, one refuses to sell for example after a 10% loss
and when the loss becomes 20% it becomes more and more difficult to sell.
Some individuals then ride the stock down to bankruptcy, when of course
they are then FORCED to acknowledge the situation as a real loss, which
then represents the total amount of their investment.
Lets’ now move on to a more relevant and more pleasant example
of the sunk cost examined by Gourville and Soman in their 2002 article
about price bundling published in the Harvard Business Review.25 Here,
the authors, among other experiments, conducted two different versions of
25 See Gourville, John, and Dilip Soman. “Pricing and the psychology of consumption.”
Harvard Business Review 80(9) (2002): 90–96.
a survey in a Colorado ski town, exposing 50 skiers each to one of two

different scenarios. The first group was told:
It’s early Spring in Colorado and you’re on a 4-day ski vacation. The day
you arrived, you purchased four one-day ski tickets for $40 each. It’s now
the morning of the last day. You’ve had three excellent days of skiing, but
rain hit the area last night making a mess of the slopes. A friend suggests
that rather than skiing, you leave early to beat the traffic home.
Members of the second group were told essentially the same thing
with one major difference, that is, they were told that they had purchased
in advance a 4-day ski pass for $160.00 total. Individuals in each group
were then asked to indicate on a 10-point scale, the likelihood that they
would ski on the last day on a range of 1 = “Definitely would not ski” to
10 = “Definitely would ski.” The findings were interesting. Those in the
group who bought individual tickets for each day said on average that they
were very likely to ski (Mean = 7.0) while those who bought the 4-day ski
pass were alternatively very unlikely to ski (Mean = 3.0).
Now, since the monetary consequences for each group in terms of
missing the last day of skiing is identical, then what motivated a dramatic
difference in intention to ski, albeit on a horrible day for skiing? As
Gourville and Soman (2002, p. 94) state:
It is far easier to account for and identify the cost of an individual product
in an unbundled transaction than within a bundled transaction. The one-
to-one relationship between price and benefits in an unbundled transaction
makes the cost of that item obvious, creating a strong sunk-cost effect and
a high likelihood of consumption.
So through price bundling, one can avoid sunk costs effects simply by
changing the frame of reference that the consumer uses to account for cost.
However, does the seller want you, the buyer, to avoid feeling the pain of
the sunk cost effect? The answer is no! Here is the logic. If you experience
the discomfort of having paid for something, and therefore the need to
consume what you paid for, if you do not consume it, you feel the sunk cost
pain. If you do consume it, the act of consumption avoids the pain. The act
of consumption also has another effect on you, that is, it suggests to you
that the product is important to you and that indeed you should purchase it
again. So, we are all familiar with the good old notion that pricing impacts
demand, in general even old economics texts will tell you that if you charge
a lot for something, then demand will drop. But what we have discussed here
is a different phenomenon, namely that pricing tactics impact consumption,
not just purchase behavior. When consumers purchase a bundle of goods,
they cannot attribute the cost of an item to a specific good; hence, they may
be less susceptible to the sunk cost phenomenon, and hence less likely to
consume the good, which means less likely to purchase the bundle the next
time an opportunity presents itself. Simply, the attribution is made that if
I used the good or service, then I must like the good or service.
L. Baader–Meinhof Effect
No, this is not an effect where for some strange reason you believe that you
have become a Prussian WWI field officer in charge of mine control or an
aging supreme court justice. Sorry to disappoint you dear reader. Rather, the
term was popularized by Linguistics Professor Arnold Zwicky of Stanford
University to describe a phenomenon which occurs in which a concept or
thing you just found out about (or bought) seems to crop up all around
you. It was first named however, by a commenter on the St. Paul Pioneer
Press’ online discussion board, who came up with it after hearing the name
of the ultra-left-wing German terrorist group twice in 24 hours. Zwicky
argued that the phenomenon is caused by two cognitive biases that are
activated at the same time. The first is called selective attention, which is
a process by which the brain selectively filters out a lot of stimuli in order
to focus on what is presently relevant. For example, did you ever have the
experience that when you purchase a new car, all of a sudden you notice a
lot of identical cars to yours on the road? The second bias that’s activated is
called confirmation bias which occurs when you consider each sighting to
be further proof of the fact that the element of interest is indeed ubiquitous
and therefore your purchase decision is confirmed.
This bias can have an impact on you as a consumer in a unique way.
First, it serves to decrease the negative feelings that you may have that
you made a purchase mistake, for example if you have purchased a big
ticket item. That is, if you attend to the fact that many other individuals
purchased say the same car as you, you may feel better from the perspective
that EVERYONE could not have made the same mistake. This essentially
serves to reduce the cognitive dissonance you have after purchase. We have
all felt such dissonance as we continually think of items we rejected in
the purchase process rather than the purchase we made especially for high
ticket items. Secondly, if this bias makes you think that something you have
purchased is a lot more common than it truly is, you may devalue it when
it comes to selling, but never fear, the endowment effect discussed above
will serve to counter such an unfavorable outcome.
M. “Mere Exposure Effect”

Zajonc (1968) (see footnote 12 of Chapter 1) was the social psychologist
who coined the concept of the “mere exposure effect.” In Chapter 1, we
discussed this effect, but to refresh your memory it relates to the fact that
repeated exposure is enough to enhance attitude toward a stimulus. More
recently, it was reported that the effect was found to be stronger when
subjects were not cognitively aware of the stimulus than when they were.26
So, does this phenomenon explain long marriages, that is, the more you
become familiar with your spouse, the more you like him/her,27 come to
think of it, doesn’t this effect come at odds with the colloquial expression
that “absence makes the heart grow fonder?”
In what can be truly frightening, Zajonc (2001, p. 224),28 claimed that
the “mere exposure effect” operates at a subliminal level. More importantly,
he hypothesized that simple exposure to a stimulus, even if you are not
aware of it, can increase liking to that stimulus, but also to similar stimuli
that you have not been previously exposed to, and to totally distinct stimuli
as well. Now, how does one defend oneself, if you are not even aware of the
attraction you have to an object place or thing? The answer is that no defense
may be needed unless of course the behavior becomes harmful, addictive
or self-destructive. This distinction is important because the mere exposure
effect has been found in many forms of consumption behavior. Consider
26 Bornstein, Robert F., and Paul R. D’Agostino. “Stimulus recognition and the mere
exposure effect.” Journal of Personality and Social Psychology 63(4) (1992): 545.
27 I don’t believe that anyone can explain long marriages, even the husband who is involved
in it!
28 Zajonc, Robert B. “Mere exposure a gateway to the subliminal.” Current Directions in
Psychological Science 10(6) (2001): 224–228.
the findings of a Canadian researcher who observed that university students

had a more favorable attitude toward a fruit drink that they had been initially
unfamiliar with the more times they tried it.29 Moreover, a researcher from
the Netherlands, argued that binge eating is driven by a learning theory
model and that elimination of cues which expose the individual to various
food can serve to reduce the behavior.30
Consider the fact that over my lifetime, I must have been exposed to
thousands of United Airline advertisements which utilized the Gershwin
theme of Rhapsody in Blue. In fact, United just recently brought back this
music in their most recent flight of television commercials featuring an
orchestra. Over time and over exposure to such commercials, I have begun
to develop a deep appreciation for the music and for Gershwin, so much so
that when it was played at the Hollywood Bowl this past Summer, I had this
immediate desire to run out of the Bowl and drive to LAX to get on the next
plane to New York. Although I am kidding of course, this example shows
that a linkage was strengthened between the brand (United) and the music
(Rhapsody in Blue) so that over time, all I need to do is hear the music to
think of the brand. When you find yourself humming a tune that you are not
even aware you are humming or even having ever been exposed to, take a
step back and make an inventory of your behavior and question at least once
every month why you are doing what you are doing. Hopefully I am not the
cause of it and it is NOT Rhapsody in Blue. At minimum, be aware of the
fact that continued exposure to a stimuli such as a brand or even advertising
for a brand can result in favorable feelings toward that object, place or
thing irrespective of whether or not you want this to be the case or are even
aware of it!
N. Negativity Bias
Imagine that I asked you to think back to your time in High School and to
remember one comment that sticks out in your mind made by another
29 Pliner, Patricia, and Karen Hobden. “Development of a scale to measure the trait of food
neophobia in humans.” Appetite 19(2) (1992): 105–120.
30 Jansen, Anita. “A learning model of binge eating: Cue reactivity and cue expo-
sure.” Behaviour Research and Therapy 36(3) (1998): 257–272.
student about you . . . are you thinking? Well, what was the comment?
Well, let’s make it a bit easier, was the comment positive or negative.
Unfortunately in most cases, you will have recalled something negative
that was said about you. That’s just the way things work, that is, humans
tend to more often recall and give greater weight to negative statements,
events, characteristics, and objects than they do for positive factors. This is
called “Negativity Bias.”
Mittal, Ross, and Baldasare (1998)31 actually showed that (1) negative
performance on an attribute by a product or brand has a greater impact on
overall satisfaction and repurchase intentions than positive performance
has on that same attribute, in decisions regarding health-care choices
and automobile purchases. Clearly, the impact of negative information on
consumers’ choice behavior has not been lost on politicians, who seemingly
believe that a law has been passed where you are actually required, in each
and every advertisement for your campaign, to derogate the opponent in
the form of what is called an “attack ad.” This was no more evident than
in the 2016 Presidential election between Hillary Clinton and President
Trump, and in the prior Republican primary. But there’s a surprise for
such politicians, because such a negative tactic is being used so often it is
beginning to lose32 its effectiveness. In fact, a meta-analysis (a study across
studies) claims that there is absolutely no support that negative campaigning
is an effective way to win votes.
The effect of negative information also seems to have more weight than
it should have when it comes to ratings of hotels on TripAdvisor and even
on the online auction site eBay. In fact, Standifird (2001)33 reported that
negative reputational ratings emerged as highly influential and detrimental.
31 Mittal, Vikas, William T. Ross, and Patrick M. Baldasare. “The asymmetric impact of
negative and positive attribute level performance on overall satisfaction and repurchase
intentions.” Journal of Marketing 62(1) (1998): 33–47.
32 In case you forgot, the 2016 Presidential election was quite nasty with lots of mud and name
calling going around both in the general election and the Republican Primaries. Consider
the names President Trump came up with inclusive of Lyin Ted, Little Marco, Low Energy
Bush, and Crooked Hillary. This led Ms. Clinton to accuse Bernie Sanders of all people as the
instigator which inspired Mr. Trump’s creation of her nickname. Also for those millennials
out there, the word is correctly spelled as “lose” NOT “loose.”
33 Standifird, Stephen S. “Reputation and e-Commerce: eBay auctions and the asymmetrical
impact of positive and negative ratings.” Journal of Management 27(3) (2001): 279–295.
While concluding that reputation was important in influencing final price for
an item sold on eBay, this researcher found an exaggerated and unfavorable
influence on price of negative reputation. Why you might ask? Simply
because of the fact that negative feedback is relatively rare on eBay, so that
if a seller gets one, it has a dramatic impact on reputation.
So what does the negativity bias mean to you in your role as a
consumer? First, it means that you should consider negative ratings in
the context of all of the positive ratings a seller or hotel may have and
do not discount such positive ratings out of hand. My wife is a French
destination specialist selling travel to various locations in France and other
locations in Europe and I have seen her being criticized time and time
again, simply because a client has found one negative rating online for a
hotel that she has recommended. This is clearly taking negativity to an
extreme. Secondly, you should carefully manage your own reputation as a
seller, so that negativity is managed. The use of positive client testimonials
go a long way in establishing your reputation and inoculating you against
negative evaluations. Finally and probably most importantly, you should try
to manage consumer expectations if you are a seller; no one can be perfect
100% of the time, and expecting that simply is expecting the impossible.
Oh! And a parting comment, one of my best friends from USC who
used to run an International M.B.A. program offered the following example
of negativity bias. I had asked him about his memories of New York because
he told me that he had gone there as a young man just returning from the
Peace Corps after a stay in Uganda. He recalled the day that he had just
arrived at Kennedy airport, thinking that he was going to spend a few days
relaxing in the city after his difficult adventure in Africa. The first thing he
did was go over to a cab driver who was waiting to pick up a fare in front of
the terminal, he asked the driver, “What is the cheapest way to go to New
York City from here?” The driver simply said, “F’off kid,” He then called
home and said he was coming back to California on the next flight, New
York City was much too primitive for him!
O. Reactance
Could you imagine exposing smokers to anti-smoking messages, and then
finding out that the messages encouraged them to smoke even more than
before they saw the anti-smoking campaign? This exact effect was found
many times in the marketing and social psychology literature and can be
explained as due to reactance and mortality salience (or making one aware of
their ultimate demise).34 That is, when you show younger smokers graphic
images of diseased lungs and people with tracheotomies, they seemingly
cannot relate to these consequences of smoking for two reasons. First,
they have their whole life in front of them and such things supposedly
only happen to career smokers, and of course, secondly, they plan to quit
before such a thing happens to them. But seeing such images activates
a psychological defensive wall brought on by reactance to the fact that
mortality is made salient to them. Therefore, many smokers who see these
images, simply either smoke more (to show that they can do this and still
survive), or state an increased intention to smoke more in the future. This
effect is kind of like, “if you dare me, I’ll show you I can do it — so there!”
The same effect can occur when a salesperson uses much too aggressive
tactics to complete a sale, resulting in the potential customer being less
likely to purchase the product as opposed to more likely. I’ve heard many
customers say after such an experience: “I’ll never purchase another thing
from that pushy company.” However, such an attitude is a function of
reactance, and in this particular case is truly a reaction to one specific
salesperson where the negative attribution being made is directed to the
entire company. If this happens, then the customer suffers, especially if the
product offered by the shunned company is truly what they desire and value
as the best in the market. So be careful regarding the inferences you make,
and try not to cut off your nose to spite your face!
P. Rhyme-as-Reason Effect (Keats Heuristic)

When I lived many years ago in Sheepshead Bay Brooklyn, I would take the
bus to the train station and pass a fruit and vegetable stand along the way. But
this was no ordinary fruit and vegetable stand, even by Brooklyn standards.
The shop was known by locals as the “poet,” and despite the fact that there
34 See for example, Erceg-Hurn, D.M., and Steed, L.G. “Does exposure to cigarette health
warnings elicit psychological reactance in smokers?” Journal of Applied Social Psychology
41(1) (2011): 219–237; as well as Martin, Ingrid M., and Michael A. Kamins. “An
application of terror management theory in the design of social and health-related anti-
smoking appeals.” Journal of Consumer Behaviour 9(3) (2010): 172–190.
were many other fruit and vegetable stores to choose from, the crowd in
front of the “poet” was always standing room only! Why? You ask? Simply
because of the slogan the shop had on their windows. It went like this . . . “I
may not be a poet, but when it comes to fruits and vegetables, I know it.”
Now, I cannot be certain that the poet’s popularity derived from his
poem, but I can be certain of the existence of an effect identified by two
Psychology professors from Lafayette College in Pennsylvania coined the
“Rhyme-as-Reason Effect.”35 These authors’ maintain that under certain
conditions, people may base their judgment of a statement’s veracity in part
on its’ aesthetic qualities. This effect has been called the Keat’s heuristic
because of the famous poet’s assertion that “... beauty is truth, truth is
beauty.”
While this finding is interesting, at this point the reader may be
wondering exactly what underlies the effect? That is, why would anyone
think that just because a message rhymes, it should be perceived as more
credible than a similar one that doesn’t? The answer lies in simple heuristics,
defined earlier as rules of thumb that individuals use to arrive at decision
choices. Quite simply, when people lack the knowledge or the motivation to
critically evaluate a message, their processing of its content is often based
on the use of simple heuristics (e.g., common sense, an educated guess, a
rule of thumb, a poem).
Remember the famous rhyme uttered by Johnnie Cochran about the
gloves that O. J. Simpson purportedly wore during the murder which served
to convince jurors that one of USC’s most famous graduates was indeed not
guilty? “If it doesn’t fit, you must acquit,” and “If it doesn’t make sense,
you should find for the defense.”
Consumers may think that celebrities are truthful, that familiar sayings
got that way because they can be relied on, or the aesthetic qualities of a
message underlie its truthfulness.36 Earlier in this chapter, I gave the reader
the advice to avoid the sole use of simple heuristics in decision-making and
I give that same advice again. So if you feel you are beginning to believe
35 McGlone, Matthew S., and Jessica Tofighbakhsh. “Birds of a feather flock conjointly(?):
Rhyme as reason in aphorisms.” Psychological Science 11(5) (2000): 424–428.
36 Eagly, Alice H., and Shelly Chaiken. “Communication modality as a determinant of
message persuasiveness and message comprehensibility.” Journal of Personality and Social
Psychology 34(4) (1976): 605–614.
that you are being convinced by the slogan on the box of your local pizza
shop, “You’ve tried the rest, now try the best,” take a big breath, eat a slice
and repeat 20 times, “You’ve tried the rest, now try number 1” and see if
the pizza tastes as good! I bet that it doesn’t.
Q. Selective Perception
On a brisk November Saturday afternoon, many Novembers ago, the
undefeated and nationally ranked37 Princeton University college football
team played Dartmouth College at Princeton’s Palmer field. Dartmouth
needed to win to give them a winning overall record, and the Tigers wanted
to maintain their perfect record and increase their national ranking. Because
of what was at stake, the game turned out to be a relatively violent affair. In
an attempt to study perceptual biases, a video of the game was then shown
to undergrads from each school and as they watched it, they were asked to
indicate whether or not they witnessed violations of the rules, and if they did
were they mild or “flagrant.” Amazingly, Princeton viewers reported seeing
nearly twice as many rule infractions committed by the Dartmouth team
than did the Dartmouth viewers. One Dartmouth alumnus apparently did
not see any infractions committed by the Dartmouth side and erroneously
assumed he had been sent only part of the film, requesting the remainder.38
His lack of finding of any rule violations should be considered in light of
the fact that Dartmouth served as the model college for the famous film,
Animal House, starring John Belushi as the uncontrollable “Bluto.” Clearly,
in that film every rule in the book seemed to be violated and, in that context,
finding no rule violations is completely understandable.
The results of the study show support for selective perception. That
is, we have a tendency not to notice and more quickly forget stimuli
which are inconsistent with our prior beliefs and which therefore may
cause emotional distress. In my own research I observed the same effect,
37 They were ranked 6th nationally at the time. Princeton won the game 13-0 and their
quarterback, Dick Kazmaier was drafted into the NFL by the Chicago Bears, also winning
the Heisman Trophy along the way.
38 Hastorf, Albert H., and Hadley Cantril. “They saw a game; a case study.” The Journal of
Abnormal and Social Psychology 49(1) (1954): 129.
regarding identification, not with a university as above, but rather with a

company. That is, investors in an environmentally green mutual fund, and
who strongly identified with the fund, were told that the fund digressed by
purchasing some companies who were not entirely green (i.e., moderately
negative publicity). This information resulted in significantly more negative
corporate associations for investors weakly identified with the fund than for
investors who had relatively strong identification with the fund. However,
when the information was severely detrimental to the fund (e.g., the CEO
embezzled invested funds), both stronger and weaker identified investors
reacted extremely negatively and expressed disdain for the firm.
These findings are not unlike what recently happened to the Los Angeles
Clippers and the racist comments made by their owner Donald Sterling.
One could imagine that if less severe information had come out about the
Clippers or their owner, say for example that the NBA declared them as the
dirtiest team in terms of some measure of aggressive play, Clippers fans
would discount this fact and their rivals would embrace it. However, the
comments of Donald Sterling which were so egregious were thankfully not
embraced by anyone, Clippers fan or not. Therefore, you should realize that
when it comes to something you identify with, be it a professional sports
team, or even a Frequent Flyer program from a specific air carrier, you
will generally be more likely to condone their behavior if it is mildly to
moderately negative. Hence, these organizations in a sense are inoculated
against say a poor performance up to a point, a consideration you would
NOT give to brands or organizations you do NOT identify with.39
The common thread that ties all of these cognitive biases together
as they impact the consumer is that awareness of them makes you
less susceptible to their effects. As you proceed through the marketing
landscape, you will surely encounter situations which can easily result in
such biases. The more you experience each situation and observe your
actions, the less susceptible you will be to the bias the next time! Now let’s
explore some Social Biases that can impact your purchasing behavior.
39 Einwiller Sabine A., Alexander Fedorikhin, Allison R. Johnson, and Michael A. Kamins.
“Enough Is Enough! when identification no longer prevents negative corporate associations.”
Journal of the Academy of Marketing Science 34(2) (2006): 185–94.

Chapter 4
Social Biases
A. False Consensus Effect

One day, as I was sitting in front of my computer with nothing to do at
work, I began to scan the rare book section of eBay. You see, I always
wanted a certain book that was in my father’s library. The book is titled:
“Unmasking Robert Houdin,” and was written by the famous magician
Harry Houdini. The book was signed and inscribed “To my brother Doc-
April 1912.” “Doc” was born as Leopold Weiss and was the younger
brother of Houdini. He also was a friend of my dad’s and a well-known
radiologist, and he used to purchase items from my dad’s used furniture
store on Amsterdam Avenue in New York back in the 1950’s. One day as
a gift, he gave my dad the book and it sat in his library, or so I thought it
did, ever since.
So, as the story goes, one day recently, I finally got up the “nerve” to
ask my dad for the book. Shockingly, he told me that just a week before,
he had sold a whole bunch of books to a rare book buyer in Santa Barbara
and among that set was the signed Houdini book. Well, I almost fainted!
My reaction was that I had to have either that exact book back, or another
one just like it, signed by Houdini. So, I called up the used book seller who
purchased the book and told him that there had been some mistake, that
indeed my dad did not intend to sell the book at all, and certainly NOT for
$400 among a set of other books. The bookseller said that the “mistake”
could be rectified if I would give him $3,000 for the book and you know
what I told him, it cannot be repeated on these pages, and it wasn’t Abra
57
Kadabra! So scanning the internet, I could find no viable option except for a
listing on eBay which at the time was offered at an opening price of $1,100.
I could only imagine that everyone would bid on this book and that
everyone would appreciate its value as I did. So, what did I do? I got into a
bidding war with one other bidder that I won, and by the time it was over
the book sold for $3,500. So I had 3,500 reasons to keep my mouth shut
when my wife asked me why I was spending so much time on the internet,
particularly on eBay recently. Making things worse, I began to find other
signed copies of the book after I purchased mine selling for $1,100 or less.
Of course I could NEVER imagine such a thing happening since I thought
that the book, clearly a rare item was so much in demand. I was wrong and
indeed was suffering from a false-consensus effect, and that bias cost me
at least $2,400 in my bidding efforts.
The false consensus effect is defined as a phenomenon where a person
tends to over-estimate the extent to which their beliefs or opinions are
typical of others.1 For example, the study that initially observed the effect
requested students to walk around campus (Stanford) with a sign exclaiming
“REPENT!” Those who agreed with the need to repent, believed that 63%
of their fellow students would also agree with this position and wear a
sign (placard) saying so, while those who disagreed with the need to
repent, believed that approximately 77% would refuse to wear such a sign.
Gershoff, Mukherjee and Mukhopadhyay (2008) maintain that the effect
is more severe when an individual likes an alternative than when he/she
dislikes it. The false consensus effect can also lead to a greater degree
of confidence in making judgments. For example, if you are eyeing the
purchase of a stock, you may also believe that others are thinking about
purchasing it, this may motivate you to purchase the equity sooner than
later. The same effect could operate in reverse however with you selling
the stock because you believe that everyone will sell. For the most part,
investors may reach such conclusions about dramatic interest in purchasing
1 Ross, Lee, David Greene, and Pamela House. “The ‘false consensus effect’: An egocentric
bias in social perception and attribution processes.” Journal of Experimental Social
Psychology 13(3) (1977): 279–301; as well as Gershoff, Andrew, Ashesh Mukherjee, and
Anirban Mukhopadhyay. “Consumer acceptance of online agent advice: Extremity and
positivity effects.” Journal of Consumer Psychology 13(1&2) (2008): 161–170.
Social Biases 59
or selling a particular equity by entering the chat-room for that equity on

the internet. Here, supposedly other investors indicate their evaluation of
the stock and in many cases try to influence you one way or the other
about impending doom or impending prosperity. The problem is that one
individual can take on many different monikers and make it seem as
if the overall sentiment is either positive or negative among the group
of interested investors. Therefore, your confidence in the stock’s price
movement may not be reflected in terms of what actually happens to the
stock, and hence you may have bought too early or sold before the big
price uptick as a function of believing that the sentiments you read reflect a
larger group of investors which they may not. This again reflects the “False
Consensus Effect.”
Many “pump” and “dump” schemers who operate by publishing what
seem to be “insider” equity newsletters sent personally to you, typically
include a post-it on the front page stating: “To Mike, from J,” thought
you would find this interesting are using the false consensus bias to take
advantage of you. Such newsletters typically fan the flames by telling
you things that supposedly only “insiders” know, making you think that
if you don’t act quickly you will miss the boat, for surely if others had the
information you were just given they would buy the stock in a second. So
what happens? You buy (the “pump” part). The stock rises slightly initially
and then falls like a rock (the dump part) and you are left holding the bag.2
I know this for a fact. Many years ago, I got a newsletter that told me all of
the wonderful things about a company called BioGas that owned a cattle
farm in Lamar Colorado. Supposedly, the cattle were fed special feed so
that they would become more flatulent and that gas would be collected as a
new/natural form of methane. I thought that this was ingenious and ran to
purchase the stock before others could get this information and get wise to
the millions of dollars I was going to make from purchasing this equity. Well,
before I knew it, my $10,000 investment had turned to $500 as the company
became what was produced by the cattle out of their Southernmost orifice.
2 The term “bag holder,” is often used in stock chat-rooms to describe pejoratively someone
who was left with a worthless stock after having purchased the stock on false dreams of
great success.
B. Lake Wobegon Effect (Illusionary Superiority)

I have a friend who just can’t seem to find the right person to settle down
with. He has been on every dating site imaginable inclusive of “Christian
Mingle,” “J-Date,” and of course “Match.com.” He has gone on countless
dates and every time it does not work out, either because he thinks that he
is much too smart for her, or she is much too short for him! He is also very
critical of the looks of potential suitors, in fact one time he was sent five
pictures from a particular women. They were taken on the beach with her
dog, and in every photo she was wearing a wide brimmed hat obscuring her
face. So, he decided to contact her on the online dating site, asking her to
specify which one in the picture was her, the one on the left or the one on
the right (the canine). Let’s say that this particular date did not work well,
as you can imagine, it never happened at all.
The bias of illusionary superiority represents a bias that results in people
overestimating their positive qualities and abilities and underestimating
their negative qualities, relative to others. Once again, it leads to over-
confidence and may explain why losing strategies are repeated time and
time again with the same result. Consider the fact that recently a news-
stand near my house went out of business because society has increasingly
become more digitalized as opposed to print based. In fact, the New York
Times recently announced that their number of digital subscribers recently
exceeded their newspaper circulation for the first time in their history.
Despite seeing that stand fail, another entrepreneur bought the space, and
put up the exact same type of newsstand, with once again many lookers
but no buyers. You have to believe that some healthy degree of illusionary
superiority played a part in the decision to open such a retail location as
the new owner thought that he could do something better than the old
owner did.
At times, the effect can be somewhat humorous as 88% of drivers
thought themselves to be in the top 50% of driving ability,3 while 68% of
the faculty at the University of Nebraska thought themselves to be in the
3 Svenson, Ola. “Are we all less risky and more skillful than our fellow drivers?” Acta
Psychologica 47(2) (1981): 143–148.
Social Biases 61
top 25% of teaching ability.4 But most importantly, those who suffer from
this bias believe themselves to be less influenced by bias than the other guy!
Finally, what is of most concern is that the effects of illusory superiority have
also been found to be strongest when people rate themselves on abilities at
which they are totally incompetent.5 This is downright scary, as I often tell
my wife, “we don’t need anyone to manage our finances and investment
strategies, I’m a wizard at it.” However, my perceived investment prowess
is evidently better than my actual investment prowess as an adventure with
my past tax returns has sadly confirmed. You see when I lose money for
myself and my wife or my children in an up year on Wall Street, I always
rationalize that I sold “the losers,” and that the winning stocks are sitting
there in all of our accounts simply waiting to appreciate more in value and
hence have not been accounted for as actual gains. But when you look at a
trend of consistent losing over the past 10 years of market investment (as
verified by my tax returns), it becomes clear that my perceived ability falls
way short of my actual ability as my account value is still waiting to jump.
I apparently am a victim of the Lake Wobegon bias, and apparently living
in a state of mind where everything I do is above average . . . not! My wife
believes that I would be better off fishing in Lake Wobegon than on the
internet investing in stocks.
C. Out-Group Homogeneity Bias

One day while reading a household magazine, I came across an interesting
advertisement for Kashi breakfast cereal. I normally wouldn’t look too long
at the advertisement because the cereal, as depicted, looked to me like bird
seed (I have since been told that the cereal is actually very healthy for
you, which probably explains why it looks like bird seed and for all I know
could taste that way). The ad did get my attention however because in many
places in the text, the company who makes the product went out of their
way to mention that it was kosher. Now for most people who do not know
4 Cross, K. Patricia. “Not can, but will college teaching be improved?” New Directions for
Higher Education 1977(17) (1977): 1–15.
5 Kruger, J. and Dunning, D. “Unskilled and unaware — but why? A reply to Krueger and
Mueller.” Journal of Personality and Social Psychology 82(2) (2002): 189–192.
what “kosher” signifies, it simply means that the food conforms to the rules
of Jewish dietary law (known as kashrut). So for example, chickens and
cattle must be killed in a certain way to be kosher (where the animal suffers
least harm) and fish without scales are not kosher since they generally are
scavengers, and of course scavengers do not eat the best diet.6 Pig is not
kosher, since in ancient times it carried trichinosis, a parasitic disease caused
by eating undercooked pork and wild game (also not kosher) which carried
the larvae of a roundworm called the Trichina worm (also not kosher!). See
what you learn in marketing!
So, after reading the ad, I came up with a simple idea for an advertising
study. I would take Kashi (not a well-known cereal) and create an ad which
mentioned multiple times that it was kosher, and another advertisement
that was identical but did not mention anything about it being kosher. I
then replicated these conditions with the well-known product Raisin Bran
made by Post cereal.7 So I had four advertisements that either described
the product as kosher or made no mention of being kosher that advertised a
cereal that was either Post Raisin Bran or Kashi. This is formally known as a
2×2 experimental design since you are manipulating two different variables
brand type — (known versus unknown) and (presence or absence) of a
kosher designation. I was interested in how people evaluated the cereal after
reading the advertisement. That is, what did they think for example of its
quality, its taste, its pureness and what was their overall attitude toward the
product?
The results were very interesting, the Post Raisin Bran cereal was
rated relatively high on quality, taste and pureness, and it didn’t appear to
matter whether or not the product was described as kosher or not. Overall,
the Kashi brand was rated lower than the Post product (to be expected)
since it is a relatively unknown brand, but what was surprising was that it
fared most poorly when it was described as being kosher. Now, the term
6 Eating a swordfish is particularly problematic because it loses its scales as it gets older,
so an observant Jew can eat a young swordfish but not an older one. How young you say?
Oy vey!
7 Kamins, M.A. and Marks, L.J. “The perception of kosher as a third party certification claim
in advertising for familiar and unfamiliar brands.” Journal of the Academy of Marketing
Science 19(3) (1991): 177–185.
Social Biases 63
“kosher” didn’t seem to matter when the Post cereal was described in this
fashion, so you couldn’t argue that such a term introduced systematic bias
in any fashion. In fact, in the colloquial use of the term, “kosher” means
legitimate, permissible, genuine or authentic, all terms conveying a very
positive meaning. So why was describing the cereal as “kosher” particularly
problematic for Kashi? When I looked at the reasons people gave for why
they rated the cereal the way they did, I found out that people felt that
the “kosher” Kashi cereal was not for them, particularly if they were not
Jewish. Hence, they focused in on one attribute and one attribute alone,
ignoring other favorable characteristics and in fact interpreting kosher in
a very narrow sense rather than its general meaning (not for me instead
of authentic for example). It is quite possible that in this case, the false
inference was driven by the cereal’s name — Kashi, which arguably sounds
kind of ethnic and maybe even Jewish in some form.
The implications of these findings are important for marketers in that it
suggests that advertisers and companies who designated their products as
kosher (Coca-Cola, See’s Candies, Ortega and Bumble Bee for example)
can suffer a loss of brand image, if the brand itself is not strong enough
to convey that it is indeed for a broad target audience. Can you imagine
the confusion that exposure to kosher Ortega Mexican foods can create?
So what is the bias that creates this confusion in the first place? It is
called Out-Group Homogeneity bias, and it is reflected by the fact that
out-group members are seen as more similar to one another than in-group
members.8 But from a marketing perspective, the bias seems to reflect itself
in the notion that ethnic relevant terms such as “kosher” or “halal” are not
seen by the more general public to the full range of their meaning and
instead maintain a restrictive image or meaning. Moreover, the use of such
terms, unless the brand is more widely known, can seemingly restrict a
company’s market share. Companies have addressed such issues, possibly
not so effectively, by using terms not necessarily known to the general
public, but meaningful to those subgroups they wish to target. For example,
8 Quattrone, George A., and Edward E. Jones. “The perception of variability within in-
groups and out-groups: Implications for the law of small numbers.” Journal of Personality
and Social Psychology 38(1) (1980): 141.
a circle with a “U” inside of it, signifies “kosher” in that the product has
been sanctified by the Orthodox Union of Rabbi’s. Now you also know if
you didn’t already!
D. Self-Serving Bias
Ambiguity is a subjective variable, but it should be possible to identify
“objectively some situations where available information is scanty . . . or
highly conflicting; or where expressed expectations of different individuals
differ widely.”9 In a marketing environment, consider the situation where
expectations of different people vary widely. This sounds like a visit to
TripAdvisor in search of a hotel, or the general lack of consensus regarding
the watchability of a given movie. The information presented to you is
sometimes vague, oftentimes directly contradictory and surely difficult to
interpret. It is under such conditions that advertising can have a dramatic
impact upon how you ultimately evaluate a product. Thirty years ago,
Henry Assael and I conducted an experiment where we manipulated the
degree of exaggeration in an advertisement designed to describe the writing
performance of a ball point pen. In the “realistic” condition, we described
the pen as it was (a relatively basic ball point pen that cost about a dollar).10
We then created more and more favorable descriptions of the pen’s writing
performance to the point of telling subjects that it once wrote on the moon.
What we observed was fascinating, since the pen’s performance is relatively
ambiguous and difficult to judge in the short time we gave the subjects
to write with it, we found that evaluation of the pen increased generally
consistent with what was stated in the advertising. That is, what was stated
in the advertisement influenced people’s evaluation of the product (until the
“moon” text was encountered, then subjects said that the pen was terrible
when actually used).
9 Quote attributed to Ellsberg, Daniel. “The crude analysis of strategy choices.” The
American Economic Review 51(2) (1961): 472–478 and utilized by Hoch, S.J. and Ha,
Y.W. “Consumer learning: Advertising and the ambiguity of product experience.” Journal
of Consumer Research 13(2) (1986): 221–233.
10 Kamins, M. A. and Assael, H. “Two-sided versus one-sided appeals: A cognitive
perspective on argumentation, source derogation, and the effect of disconfirming trial on
belief change.” Journal of Marketing Research 24(1) (1987): 29–39.
Social Biases 65
While this bias may not seem to be “self-serving” from the perspective
of the consumer, it is from the perspective of the company who sells the pen.
This is because the company, through the use of advertising, can get you to
infer quality attributes about the pen simply as a function of having read the
advertisement. That is, the advertiser can influence your thoughts about the
pen. Sometimes however, you do the sales job on yourself. For example,
on TripAdvisor, there are enough positive and negative experiences at the
same hotel to last a lifetime, and I would argue that if you had a decision
rule to avoid any hotel that had a single negative rating, you would be
spending your summer vacation in your hot apartment in the city. Therefore
almost like a Rorschach test, you can pick and choose among the quotes
to convince yourself of anything, nice location, good service, close to the
beach, anything. So if you have an agenda, for whatever the reason, you
can cloak it with ambiguous information, kind of like my successfully
convincing my wife that I wanted to see the Woody Allen movie about
Rome, because I liked to see Italian cities. But mostly, (although not
mentioned), because I liked to see a certain Spanish actresses by the name
of Penelope Cruz, especially in the role that she played in that film.11
So if you are panicking because advertising can frame how you actually
interpret product usage under certain conditions, you have a right to panic,
particularly if it involves an expensive or risky purchase. In such a case,
always consult other sources of information aside from advertising or
trial. Consumer Reports comes to mind as does the opinion of “marketing
mavens”12 who may be experts in the product area, as well as friends and
family.
I recently received a sales brochure from a real-estate agent in Southern
California, detailing all of the recent sales this individual had completed
over the past few months. The agent mentioned house after house that he
had sold above the asking price all within a short period of time. He actually
coined a slogan for his business and it went something like this: “Call Fred
11 I was not disappointed by her physical appearance in this movie titled: “To Rome with
Love.”
12 Linda Price wrote a fascinating piece of the concept of being a “Marketing Maven” in
the Journal of Marketing in 1990, discussed quite nicely by Malcolm Gladwell in his book
“The Tipping Point.”
Rice, for quick sales above the asking price!”13 Frankly, I looked at Fred’s
results with amazement and awe until I opened up the local paper and read
a report in the Los Angeles Times that home sales and prices in Southern
California had increased dramatically over the past year with prices rising
on average 20% often resulting in multiple bids on a given home, often
for more than the asking price. Hmmmmm. All of a sudden Fred Rice’s
amazing results seemingly could not be attributed to just Fred but were
actually representative of the environmental conditions as a whole, and
Fred was happy to take credit for this. I know for many of you this sounds
awfully like a certain President I have in mind, but it’s not healthy to go
there as it leads to Agida!14
I’m sorry to disappoint Fred, but this example is a poster boy for the
“self-serving” bias where people choose explanations for behavior in a
strategic way so as to make themselves appear in a more positive light to
others. This bias has its origins in Attribution Theory, which attempts to
explain the causes that humans use to infer the reason for why they (and
others) behave in a certain way in a given situation.15 The self-serving bias
implies that when the event is favorable to the actor (e.g., selling properties
quickly and for a high price), such a result is attributed to an internal skill set
which discriminates him/her from others, whereas when the event is nega-
tive (e.g., paying too much for a product or service), the attributional cause
for such an effect is placed upon the situation, environment or the behavior
of others. You can be sure that if home sales were dismal and Fred’s results
were not so good, he would not be touting his exceptional ability in the real
estate market but rather blaming environmental conditions, the Democrats,
or the Republicans, for such a terrible economic and housing climate!
Some people make lots of money claiming that they have the expertise
to either financially manage your money, (as claimed by George Clooney
13 This is a fictitious name to protect the innocent.

14 Agida, for you baby boomers out there, came from an Alka Seltzer commercial and means
indigestion but more generally means mental anguish.
15 See Jones, Edward E., and Keith E. Davis. “From acts to dispositions the attribution
process in person perception.” Advances in Experimental Social Psychology 2 (1965): 219–
266; Folkes, Valerie S. “Recent attribution research in consumer behavior: A review and
new directions.” Journal of Consumer Research 14(4) (1988): 548–565.
Social Biases 67
in the recent movie Money Monster supposedly modeled after Jim Cramer
on Mad Money), or become your effective life coach. But again, you must
ask, is their success a function of the external environment? That is, can
everybody during the same time period do just as well and where is the
evidence that YOUR expert is doing better? So, how do you find such
evidence if it exists? Ask for proof of the seller’s track record, ask for
testimonials and ask for references.
In summary, if self-serving bias relates to people’s tendency to attribute
positive events to their own character but attribute negative events to external
factors, be sensitive to those “experts” out there who make money by selling
services and who tout impressive documentation. Always ask for it before
engaging in their services.

Chapter 5
Memory Biases
If you are like me, you begin to realize that your memory is not what it used
to be. Names and places become difficult to remember and when it comes
to the names of my students, as we say in New York, fuggedaboutit. Now on
top of those memory lapses, I have to tell you more bad news, in that when
your memory actually works well, you can suffer from memory biases. So
let’s explore what these biases are, but don’t feel down if you identify with
these issues, since you probably will forget about them soon enough.
A. Schema Incongruence Effect

You just sat down to watch the Super Bowl and on comes a commercial
which supposedly follows the life of an ordinary guy who suddenly and
unexpectedly is challenged to a game of ping-pong by a long haired Arnold
Schwarzenegger wearing a blond wig with a sweat band around his brow.
The commercial is for Bud-Light, a Light Beer whose tag line happens to
be “Are You Up For Whatever?” In other words, you should drink this beer
when challenged by anything thrown at you in life. Now while you still may
be trying to figure out what drinking beer has to do with life’s challenges,
you probably remember the commercial because of the distinctive and
“incongruent” usage of Der Terminator as a wigged out ping-pong player. If
anything, given Arnold’s fame as a weight-lifter, and in the movies as Conan
the Barbarian, and as the Terminator, you would expect him to challenge
this mere beer drinking mortal in a test of strength, but ping-pong as Arnold
would probably say, is a game for sissy’s.
69
But this is what makes the use of Mr. Schwarzenegger so effective in

the commercial. The He-man playing a “sissy” game, is incongruent, as is
the likelihood that anyone would come across Arnold dressed up in shorts,
wearing a blond wig and challenging you to a game of ping-pong. Both of
these concepts represent a schema (a mental structure of core-conceived
ideas) that are inconsistent with what one typically thinks about Arnold
Schwarzenegger. This then makes for a recipe for effective placement
of the commercial in the long-term memory of the viewer, so that when
one is asked to recall a recent memorable commercial, Arnold, ping-pong
and Bud Light come to mind. Research on images that are inconsistent
with existing schema show that the introduction of information that was
highly incongruent with the schema made schematic information more
memorable, under both immediate- and delayed-recall conditions.1
For you, the consumer, while the commercial may be humorous, the
most important characteristic of it is that it is memorable. It stands in
memory above all other beer commercials, and from the perspective of
the company it is hoped that high recall leads to high sales, but this is
not always the case. What does matter is that you understand why such a
commercial is easily recalled by you and why it stands out in your memory.
It all boils down to the ludicrousness of the image and the impact that it has
on your memory.
Consider another series of incredibly humorous television commercials
created by Snickers. In one scenario you have two young men talking to
two women trying to make small talk so that they can socialize. But when
one of the young men sees the girls looking beyond him at some other man
walking in the background, he morphs into Joe Pesci in character from the
movie Casino and tells the girls, “Whatta you looking at, we’re not good
enough for you, you looking for something else, what are you a big super
model, whatta you model gloves? It’s at that point that his friend takes him
1 See O’Sullivan, Chris S., and Francis T. Durso. “Effect of schema-incongruent information
on memory for stereotypical attributes.” Journal of Personality and Social Psychology 47(1)
(1984): 55; also see Pezdek, Kathy, Tony Whetstone, Kirk Reynolds, Nusha Askari, and
Thomas Dougherty. “Memory for real-world scenes: The role of consistency with schema
expectation.” Journal of Experimental Psychology: Learning, Memory, and Cognition 15(4)
(1989): 587–595.
Memory Biases 71
in the back room and asks him to eat a Snickers bar “because you get a
little angry when you’re hungry.” When the camera goes back on the two
“gentlemen” Pesci, after eating the Snickers bar morphs into his original
persona, that of a 20 something bushy haired kid, who says: “So ladies” with
the response of “So Losers” as one of the women has in turn morphed into
Don Rickles.
Again, this commercial works effectively on a schema incongruent level
as Don Rickles and Joe Pesci take the place of, respectively, a young woman
and young man in the promotion. Because of this, the commercial is quite
memorable and even makes the point that by eating the Snickers you can
break the hunger pangs that often make us grumpy. Who better than Don
Rickles and Joe Pesci as examples of angry individuals? So the next time you
are hungry, the answer is to eat a Snickers bar, but not necessarily to replace
your regular meal. The commercial and its other variants work well for
another reason, that is, it frames Snickers as something that addresses one’s
hunger (therefore as a nutritious treat), rather than simply as an unhealthy
candy bar. The framing effect was discussed back in Chapter 3.
B. Context Effect
On a recent trip to Spain, I arrived at the airport in Barcelona, and while my
wife waited in line to pick up the luggage, I sauntered off in the direction
of the car rental. We needed a car since we planned to tour Spain, starting
in Barcelona and visiting Grenada, Seville, Cordoba, and Toledo, finally
ending up in Madrid. As I waited in line to pick up the car, my mind drifted
off to thoughts of other occasions that I rented a car in a foreign country
and had to make the “insurance” decision. I could not stop thinking about
the one occasion that I decided that in order to “save money,” I would forgo
getting total insurance coverage and chance it that I not get into an accident.
I must have rented a car on such an occasion tens of times, but for some
reason I could not get out of my head that fateful day when I was driven off
the road by a 4×4 trailer in Ireland and ended up breaking the car’s axle
and parts of my body.
So when it was my turn to go up to the desk, the first thing I blurted out
was, “I’ll take full insurance coverage,” before even being asked and even
before the clerk knew who I was. This experience shows that cognition
and memory are dependent upon context such that in-context memories
are generally easier to retrieve than out of context ones.2 You find yourself
in a rental car office, and your own rental experience from dating back
when you were 25 may pass before you in a blur. And of course, because
of the “negativity bias” and the “availability heuristic,” discussed earlier,
most prominent in your memory are the bad experiences rather than the
numerous times you rented the car and returned it none the worse for wear.
So, while important decisions might benefit from being made in context,
understand that the context effect serves to sharpen your recall of relevant
experiences while the negativity effect interacts with it, making negative
experiences more salient and more easily available in your mind. In this
case, the end result is a conservative decision, which might have benefited
by being made earlier and with more thought than emotion, way before you
entered the rental location.
C. Egocentric Bias
I am going to admit here and now that I am an e-commerce addict,
particularly in the use of eBay and Priceline. I often find myself at odd
hours of the early morning trolling eBay looking for great buys and telling
my wife the next day what I bought that I don’t need simply because I got
a great price on it. I also cannot resist using Priceline to find a hotel room
because I enjoy the “game” of bidding on something that could be wonderful
at a bargain price and then telling all of my friends how I stayed at a five
star hotel for a two star price.3 By the way, did I ever tell you about the time
I bought a rare penny on eBay worth over $500.00 for $25.50. Well, I started
out on eBay scanning the listings that offered “foreign coins,” which also
had photos of the coins. I narrowed down those listings by looking at the
record of each seller to see if they had primarily sold coins in the past. I then
eliminated those who did. I was looking for novices who happened to have
2 Smith, Steven M., and Edward Vela. “Environmental context-dependent memory: A review
and meta-analysis.” Psychonomic Bulletin & Review 8(2) (2001): 203–220; also see
Tourangeau, Roger, and Kenneth A. Rasinski. “Cognitive processes underlying context
effects in attitude measurement.” Psychological Bulletin 103(3) (1988): 299.
3 I know for sure that I am an addict because I still go to find a hotel room on Priceline even
in the event that the hotel room is being paid completely by my university such as when I go
to a sponsored conference.
Memory Biases 73
some coins around the house, thought they were foreign and decided to sell
them on eBay (similar to someone who sells things in a yard sale that has
accumulated “stuff” over the years and does not know their true worth).
I outbid everyone for the lot, and when it came in the mail I opened it.
Among the 185 coins in the little canvas bag I received were 35 American
coins that happened to be Indian pennies (pennies minted in the United
States between 1859 and 1909 that had an Indian’s head on the front) and
obviously were NOT foreign. Upon closer examination one of the pennies
dated from 1909, and when I turned it over, it had an “s” indicative of
being minted in San Francisco. Being in extra fine condition, it was worth
$545.00. So, if you are clever you can get a great buy.
When I again checked my records regarding the price that I paid for
these coins to verify what I was telling you, the reader, I found out that I had
actually paid $145.00 for them and not the $25.50 that I remembered and
first reported. I was a victim of the “egocentric bias” since the memory of my
eBay prowess was a little more exaggerated than my actual successes. This
is similar to reporting that one caught a whopper of a fish which actually
weighed in at nine ounces. But c’mon, getting a 1909s Indian Penny for
$145.00 ain’t bad is it, especially when it’s worth almost four times that
price! You see, I get a charge for being known among my friends as the
“King” of eBay and Priceline and am seen as a Marketing Maven for these
online retailers.4
That is, if you need a hotel room anywhere, I can get it cheap and I know
how to bid on eBay so that you don’t necessarily overpay (the whole truth
on how to do this will come out in Chapter 10, please don’t peek!). But
this “need for acceptance” and “immature behavior” as my wife chooses to
see it makes me susceptible to recalling the past in a self-serving manner,
and hence I suffer from the egocentric bias, a memory-based affliction.5
Now that I told you, I feel better and can avoid paying oodles of dollars for
psychiatric work!
4 Feick, Lawrence F., and Linda L. Price. “The market maven: A diffuser of marketplace
information.” The Journal of Marketing 51(1) (1987): 83–97.
5 My wife also believes that I suffer from many other brain based afflictions. When she says
this, I tell her that she must also suffer from some “biases” since she has been married to
me for over 40 years.
So how can we effectively deal with such a bias? If we have a tendency

to remember the past in a way that is self-flattering, this makes it difficult to
replicate what happened in the past, currently in the present. Consider the
eBay example, if I incorrectly recall a price for a set of coins that I never
actually won at that price, any deal I try to win will pale in comparison and I
will never be satisfied. In fact, I may not even be willing to consummate the
deal since it cannot even come close to what I did not get in the past. There-
fore, it is important to document your past consumption activities and review
them before making a purchase again. Priceline does this for you as does
eBay, providing a past history of your purchases, respectively, within the
last year and for 30 days or more on eBay. That way your expectations can
be regulated and the price you paid can be compared to reality not fantasy.
D. Fading Affect Bias

If you have recently taken a trip on a plane that lasted for 10 or more hours
(and I’m not talking about your last trip on Spirit Air between Los Angeles
and Las Vegas), then you know how painful it was both psychologically and
physically to sit there watching either a movie or simply viewing the map
and the progress (or lack of progress) of the flight with little or nothing else
to do. Yet the pain of sitting there at the time had to be many times more
stressful than you reminiscing about it today, days or weeks later. This is
because the emotion attached to unpleasant memories tends to fade more
quickly than the emotion attached to pleasant memories.6 For example,
sometimes, I can still feel the breeze on the beach in Kona 3 years after
I first stepped foot in the Pacific.
So, the question remains, why does one’s autobiographical memory
for unpleasant/negative events dissolve faster than one’s memory for
pleasant/positive events? Taylor (1991) presents an explanation in the
form of the “mobilization–minimization” hypothesis.7 According to this
hypothesis, when a person experiences a negative event, two sets of
mechanisms are activated.
6 See Walker W. Richard, John J. Skowronski, and Charles P. Thompson. “Life is pleasant —
and memory helps to keep it that way!” Review of General Psychology 7(2) (2003): 203.
7 Taylor, Shelley E. “Asymmetrical effects of positive and negative events: the mobilization-
minimization hypothesis.” Psychological Bulletin 110(1) (1991): 67.
Memory Biases 75
The first mechanism is the mobilization of resources: The theory

maintains that when a negative event occurs, people will strongly mobilize
their biological, psychological, and social resources to cope with the
immediate consequences of the event. That is, the individual sometimes will
try to make the best out of the situation. For example, in the 10 hour airplane
trip example discussed above, one might ask for another seat cushion, a seat
(if available) in an open row, or one could simply get up, walk up and down
the aisles and ask for a stiff drink. Clearly, for positive events such a degree
of distractive mobilization is not required as one wants the current moment
to simply last longer. That is, keep it coming!
The second mechanism that regulates the fading affect bias is minimiza-
tion. Here, the goal is to minimize the impact of the event. Minimization
occurs biologically, cognitively, and socially, and it is usually stronger for
negative relative to positive events. The goal of minimization is to “deaden”
the emotional impact of negative events relative to the impact of positive
events. Such deadening occurs directly because people are motivated to
view their life events in a relatively positive light.
So how can you utilize the fading affect bias to your advantage when
engaging in purchase behavior? Let’s go back to the familiar example
I have used in this section regarding a 10+ hour airplane trip say across
the Atlantic from Los Angeles to Rome. You compare the price to fly
“First Class” versus “Coach” and see that the cost for the former ($9,013)
is almost four times the cost of the latter ($2,363). Then you read an
advertisement from a new airline which has just joined the Star Alliance,
which states in a bold 50 point Headline: “The fastest 13 hours to Rome
from LAX that you will ever spend.” In smaller text they mention, the
extra leg room and padding in their seats, on-board free internet, two hot
meals, a wide range of entertainment options inclusive of local television
and competitive games across seat locations. This company is framing
the flight ahead of time for the customer and delivering upon creature
comforts (e.g., enhanced seating and leg room) as well as social linkages
(competitive games between passengers) necessary to make the time flow
faster. In essence, they are utilizing both mobilization and minimization
in their strategy. Clearly, the slogan “The Fastest 13 hours to Rome,”
focuses on minimizing the perceptual length of time that the passenger has
to endure.
E. Primacy and Recency Effect

E.1. Primacy
What does Wrigley’s chewing gum, Ivory soap, Kellogg’s Corn Flakes,
Coca Cola, Crisco Shortening, Campbell’s soup and Colgate toothpaste all
have in common? Despite being relatively famous brand names, they all
happen to be “pioneer brands” an area of research that I have investigated
rather thoroughly.8 That is, they are the first brand introduced in a product
category, and therefore they have what is called in marketing the “First-
Mover Advantage.” The first-mover advantage that the pioneer brand enjoys
represents a primacy effect and is derived from three advantages that being
the first brand in a category conveys. First, the pioneer brand sets the
consumer’s expectations about the product class, since it is the first brand
that they experience in the product class. Essentially, the pioneer becomes
the category prototype and typically is used as the standard to which all
other later entrants are compared. Second, the pioneer brand, since it is
first in the market, can take the best position in the market since it has
absolutely no competition as no other brand has yet entered the market.
Finally, pioneer brands, since they are first in the market, can set up entry
barriers to prevent other brands from entering successfully. For example,
the more a company produces, the less the unit cost of production, and since
the pioneer has a sales advantage against the competition, it ultimately has
a cost advantage against the competition.
Most people believe that the pioneer brand, since it is first, is the
“best” brand in the category and this is biased thinking. Why? Simply
because the later entrant benefits from observing the pioneer and avoiding
the mistakes it has made; in addition, a later entrant may have developed
some technological advantage relative to the pioneer which assures that its
product quality is better than the pioneer.9
8 See Alpert, Frank H., and Michael A. Kamins. “An empirical investigation of consumer
memory, attitude, and perceptions toward pioneer and follower brands.” The Journal of
Marketing 59(4) (1995): 34–45.
9 See Alpert, F.H. and Kamins, M.A. “Pioneer brand advantage and consumer behavior: A
conceptual framework and propositional inventory.” Journal of the Academy of Marketing
Science 22(3) (1994): 244–253 for a interesting article on what are the sources of the pioneer
advantage.
Memory Biases 77
E.2. Recency
Recency represents another advantage that exists in the marketing and
consumer behavior world. Consider the movie industry where typically
15 or more full length features are released each week. For some movies,
approximately 50% of the total domestic take over the commercial lifetime
of the movie is made in the first weekend of release. This was true, for
example for three of the five Twilight movies released between 2008
and 2012.10 I actually tested the strength of the recency effect by giving
my students a choice between watching “Unforgiven” a western themed
movie and Academy Award winner of the “Best Picture” from 1992
starring Clint Eastwood, Gene Hackman and Morgan Freeman or the more
recently released movie “A Million Ways to Die in the West,” starring Seth
MacFarlane and Charlize Theron. The amazing result was that 95% of the
students chose the more recent movie despite the fact that its credentials
do not match those of “Unforgiven,” and most importantly not one student
had previously seen or heard anything about the Unforgiven and many were
not familiar with its stars. In addition, I had told the students that the new
movie had only mediocre reviews.
I have replicated these findings many times and they suggest to me
that when it comes to movies, the objective measure of quality (e.g., an
academy award movie rated as best picture), is ignored in favor of newness.
Somehow, when someone is told that the quality choice is outdated or old, it
is dominated by the item that is current even if that item is not blessed with
the same favorable reputation as the older item.11 I find this effect also to
be true with books, in that students would prefer to read a top 10 best seller
than an older renowned classic and from my own observation the desire to
read a current best seller wanes the longer it is on the market among those
who have not yet read it but claim that they desire to do so.
Hence, my advice to the consumer is to broaden their horizon by not
taking the simple route of rejecting older products simply because they are
10 See the internet site, “Box Office Mojo,” for the entire Twilight series, consisting of five
movies.
11 This of course is not true when one is looking to buy antiques, where age is a valued and
essential characteristic of the item.
old.12 I can understand such behavior if the item relies on technology, where
one could reasonably claim that the older item is outdated and hence less
effective or efficient that that available today. But what if the item offered
for sale is a work of art, such as a book or a movie? By expanding the
choice option, one can be more pleased with one’s choice and oftentimes
the older product is available for a cheaper price than the product which
has just recently been introduced into the market. So don’t be a “sucker”
and fall for the recency bias. Everything new is not always the best and
everything old is not necessarily decrepit and worthless. Come to think of
it, this hits close to home as I am not a spring chicken.
F. Spotlight Effect
Have you ever seen the television commercial where an attractive woman
is about to kiss a man but stops because of his “ring around the collar?”
This vintage commercial by Wisk was extremely powerful because it is an
example of a fear appeal, directed at a negative social consequence for the
consumer. Likewise, Talon zippers had a well-known commercial showing
a man who did not realize that he had “gaposis” and upon meeting a date
for the first time had his pants zipper completely open. As we say in New
York City “X, Y, Z,………”
But why are these commercials so effective? Part of the reason lies in
the presence of the spotlight effect where people tend to believe they are
being noticed more than they really are.13 This is due to a human tendency
to forget that although one is at the center of one’s own world, one is not
the center of everyone else’s. This of course is true for mostly everyone on
earth everyone except Kim Kardashian, the Kardashian sisters and nieces
and their mother and former dad. So when you combine an appeal that
focuses on social shame or “fear” (e.g., a dirty collar or open fly that is
noticed in an embarrassing situation) combined with this human tendency
12 I give the same advice as it applies to relatives and friends.

13 See Gilovich, Thomas, Kenneth Savitsky, and Victoria Husted Medvec. “The illusion of
transparency: Biased assessments of others’ ability to read one’s emotional states.” Journal
of Personality and Social Psychology 75(2) (1998): 332.
Memory Biases 79
to believe that others are disproportionately looking at them, you have the
recipe for an impactful ad campaign.
For a fear appeal to be successful, however, according to Pratkanis and
Aronson (2001), four components must be present.14 There must first be a
threat, then a specific recommendation about how the target market should
behave to resolve the threat (e.g., buy Wisk). Then the target market should
believe that the recommendation will be effective in addressing the threat,
and finally the target market must believe that they are capable of effectively
applying the solution. What could be simpler than washing your shirts with
Wisk?
The lesson here is to realize that (1) You are not the center of the
universe — hard for the Kardashians — hopefully easier for you if your
name is not Caitlyn Jenner and (2) for many of these so called threats, they
exist only in your mind. For example, one would have to get particularly
close to you to see that your collar is dirty, and if someone did this to you
in New York City, the best thing to do is call 911, don’t worry about your
wash . . . you can do it later. The commercials which focus on fear appeals
generate situations that are unlikely to happen and make them extremely
likely (or in academic parlance . . . enhance the probability that the event
will occur), remember this the next time your zipper is at half-staff.15
G. Von Restorff Effect

It seems like every time you turn on the radio or watch TV you see another
Geico commercial and the talking Gecko with the British accent. Many
of their commercials show something out of the ordinary or ludicrous like
basketball player Dikembe Mutombo blocking a child from throwing cereal
into a shopping basket, or the famous Geico cavemen. But probably the most
well regarded Geico commercial involved the presence of a camel walking
through an office telling everyone that it was “hump” day (Wednesday).
14 Pratkanis, Anthony R., and Elliot Aronson. Age of Propaganda: The Everyday Use and
Abuse of Persuasion. New York: Henry Holt & Company (2001).
15 You are much more likely to forget to pull it up than for it to fall down and Talon does not
fix this problem. I have a greater tendency than the rest of the population to do this because
I am a professor and I forget everything, like the time I forgot I had an attached microphone
and I went into the bathroom. That’s a story for another time!
Although many of the themes of these commercials have little to do with

the purchase of insurance, they still are effective because their lack of
reverence, uniqueness and creativity which strongly associate them with
Geico. Moreover, as Jackie Mason would say, “Let’s be honest,” the product
of insurance is not the most exciting product out there.
The Von Restorff or isolation effect predicts that an item that stands out
like a “sore thumb” is more likely to be remembered than other items and
was first named in 1933 by Hedwig Von Restorff who worked as a post-
doctoral assistant to Gestalt psychologist Wolfgang Kohler.16 The effect
was extended to marketing and advertising by Morris Holbrook and Meryl
Gardner (1993), who called it a “prominence effect.”17
Just because an advertisement is prominent, and easily recalled because
of its uniqueness, it does not mean that the ad itself will be impactful. In
advertising, marketers focus on what is called the “Hierarchy of Effects”
first proposed by Lavidge and Steiner (1961), respectively, an advertising
principle and professor at the University of Chicago. These authors pro-
posed that advertising works by moving the prospective purchaser through
the following stages: unawareness => awareness => knowledge =>
liking => preference => conviction and finally purchase. This can be
alternatively viewed as moving the prospective consumer from cognition
to affect or feeling and finally to action or purchase. The Von Restorff effect
addresses awareness or cognition, that is, its impact is to make the advertise-
ment or the product stand out. However, just because you notice something
does not mean that you should buy it. Smart consumers go beyond simply
awareness in their path to purchase, and I suggest that you do too.
H. Zeigarnik Effect
In my role as an expert witness in legal cases, I once worked on a case
where a small company had created a product called the “Personal Post
16 Von Restorff, H. “Über die wirkung von bereichsbildungen im spurenfeld.” Psychologis-

che Forschung 18(1) (1933): 299–342.
17 Holbrook, Morris B., and Meryl P. Gardner. “An approach to investigating the emotional
determinants of consumption durations: Why do people consume what they consume for
as long as they consume it?” Journal of Consumer Psychology 2(2) (1993): 123–142; see
also Lavidge, Robert J., and Gary A. Steiner. “A model for predictive measurements of
advertising effectiveness.” The Journal of Marketing 25(4) (1961): 59–62.
Memory Biases 81
Office.” While this sounds like a relatively complex product that has the
capacity to do many different things, it actually was quite a simple product
that looked like a fishing hook attached to a scale, the whole gizmo weighed
about 5 ounces. You would attach your letter to the hook and the weight of
your letter would pull down the hook, revealing some numbers indicating
how much postage you were required to pay. Actually, the product was
quite ingenious and was sold as a specialty product which had an important
functional value as well as a conversational interest.
The story would end there if not for the fact that Pitney Bowes, came
along and decided to name their postage meter machine the “Personal Post
Office,” neglecting the fact that the small company had already named
their product by that name. Now a postage meter machine is very different
than the product offered by the small company. First of all, it takes up
a lot of space on a tabletop, weighs a lot, is computerized, and allows
the user the ability to personalize one’s mail with specific messages in
addition to actually generating the stamps needed for exact postage. After
the smaller company complained about the potential for confusion between
their product and that made by Pitney Bowes, Pitney Bowes then offered to
resolve the name issue by naming their product the “Personal Post.” It was at
this point that I was called in to attempt to resolve the issue from a marketing
perspective. My position was that when a consumer is presented with the
name Personal Post in the context of mailing letters and the need for stamps,
they will complete the name “Personal Post” with the word “Office.” That
is although the product is presented to you the consumer, as “Personal
Post,” in your mind you will feel a need to complete the brand name and
the most logical way to do this is with the word “Office” resulting in the
brand name “Personal Post Office,” or the name that the smaller company
already had usage of. This need for completion of a series of words or even
a musical tune is consistent with what is known today as the Zeigarnik
effect.18
According to the story, one evening Bluma Zeigarnik was eating dinner
in a Viennese restaurant and noticed something strange. No, I know you are
18 The original article written in German by Bluma Zeigarnik was written in 1927. The
title and reference to the article is as follows: Zeigarnik, B. “Das Behaltenerledigter und
unerledigter Handlungen.” Psychologische Forschung 9 (1927): 1–85.
thinking that there was a fly in her soup, but if that was the case she would
have discovered the “fly in the soup effect,” and that didn’t happen! What
she did notice was that the waiters seemed to only remember orders which
were in the process of being served. When completed, the orders evaporated
from their memory. Finishing up her meal quickly, she ran back to her lab,
and noticed that after she had eaten she could not remember exactly what
she had eaten, . . . only kidding again. Actually, she ran back to her lab to
test out a theory about what was going on, and she began to formulate the
experimental design for what was to be the cornerstone of her published
work. In her experiments, she asked participants to do 20 or so simple little
tasks in the lab, like solving puzzles and stringing beads (Zeigarnik, 1927).
Except, some of the time they were interrupted half way through the task.
Afterward, she asked them which activities they remembered doing. What
she found was that people were about twice as likely to remember the tasks
during which they’d been interrupted in than those they had completed.
Therefore, the Zeigarnik effect observes that people remember uncom-
pleted or interrupted tasks better than completed tasks. In Gestalt psychol-
ogy: http://en.wikipedia.org/wiki/Gestalt_psychology, the Zeigarnik effect
has been used to demonstrate the general presence of Gestalt phenomena:
not just appearing as perceptual effects, but also present in cognition as
subjects express a need for completion.19 Heimbach and Jacoby (1972)
extended this explanation from tasks to a consideration of messages, in
particular, advertisements and marketing. They argued and found empirical
evidence for the fact that hearing the beginning of a message leads to the
development of a need to hear the rest of it. In their explanation, it was like
“waiting for the other shoe to drop.” They noted that the resulting tension
of a need to complete an uncompleted sentence resulted in an improvement
in memory for the part of the message that had already been heard.
19 See Savitsky, Kenneth, Victoria Husted Medvec, and Thomas Gilovich. “Remembering
and regretting: The Zeigarnik effect and the cognitive availability of regrettable actions
and inactions.” Personality and Social Psychology Bulletin 23(3) (1997): 248–257.
These authors examine a Zeigarnik explanation for the more salient remembrance or
regrettable omissions (inactions) than regrettable commissions (actions); see also Heimbach,
James T., and Jacob Jacoby. “The Zeigarnik effect in advertising.” in M. Venkatesan (ed.),
SV-Proceedings of the Third Annual Conference of the Association for Consumer Research,
Chicago, Illinois (1972), pp. 746–758.
Memory Biases 83
Many of you will be too young to remember Salem Cigarette’s famous

melody of the 1950s and 1960s which went like this: “You can take Salem
out of the country but. . .” You could not help completing the sentence with
the following: “You can’t take the country out of Salem.” Even to this day,
that jingle is fresh in my mind. And if you are curious about the case of the
small company versus Pitney Bowes, the attorney for Pitney maintained that
I could not reasonably discuss the content of the article by Bluma Zeigarnik
into my opinion on case issues because I had not read the entire original
article in German before I was interrupted by having to take my dog out.20
My response was that I read the first 10 pages of the article in German, and
remembered it clearly even though I do not speak or read German. He did not
appreciate my humorous reference to the Zeigarnik effect, I hope you do!
In the chapters that follow, we now turn to a discussion of how marketing
manipulation is reflected for each of the 4 Ps of Marketing, that of price,
product, promotion and distribution (place). Hopefully the chapters that
follow will make you aware of techniques and strategies that are for
example, designed to induce loyalty for a given product, get you to purchase
more than you originally intended to and in fact get you to switch brands
and even pay more for a product than you originally intended to. While you
may not recall all of the suggestions that follow designed to make you a
“smarter” consumer, using one or two techniques that will be suggested will
get you a long ways down that path! So let’s begin. But first, let’s examine
how not doing anything does not get you off the hook, as everyone must
consume at some point in time. Our discussion of inertia leads us into a
discussion of the 4 Ps.
20 This of course assumes that there are no translations of the article into English (which there
are), and if these translations exist, they do not do justice to the article’s subtle meanings as
conveyed in its native language. I read the article in English, and relied on the translation
for my contribution to the case. I rest my case.

Chapter 6
The Problem of Inertia
A. Consumer Perspective
In classical physics, inertia is defined as the resistance of any physical
object to any change in its state of motion, including changes to its speed
and direction. In other words, it is the tendency of objects to keep moving
in a straight line at constant linear speed. So what does physics have to do
with consumer behavior and marketing? It turns out that inertia exists in this
context as well! In marketing, the word has been used to describe businesses
and consumers that do not adapt or change their marketing strategies to meet
changes in the marketplace or different economic situations. They simply
keep moving straight ahead, running the same old play for 3 yards up the
middle. When this happens one’s actions are predictable whether you are a
company or a consumer. When a company or a consumer fails to regularly
review its marketing strategy, marketing inertia takes over and profits or
decisions suffer as a result. Henry Assael (2005) in his model discussing
the “anatomy” of buying behavior maintains that consumers experience
inertia when they are not highly involved in the purchase process, and
when they perceive few differences between brands.1
Now, there are many product categories that we make purchases in,
where it is difficult to maintain significant involvement since they seem to
be mundane and therefore not worthy of significant cognitive effort. For
1 See Assael, Henry. Consumer Behavior A Strategic Approach. Boston, Massachusetts:

Centrage (2005), Chapter 3, part 3.
85
such basic product categories, the consumer reacts as a cognitive miser.

I can just imagine my wife’s reaction in a supermarket if I were to spend
15 minutes going over the different brands of toilet tissue in order to find
the one with the most fibers and the greatest thickness. Clearly, an in-store
product trial would not be possible in this product category! According
to Fiske and Taylor (1991),2 the idea behind being a “cognitive miser”
is that humans greatly value their mental processing resources and hence
find different ways to save time and effort when negotiating their life’s
path through the social world. Therefore, in our marketing interactions as
consumers, we are hardwired to find simple heuristics (rules) to cope with
the myriad of decisions we have to make during the day. One such simple
rule would be to buy the brand one bought the last time, maintain the
status quo and devote little time and effort to thinking about change. But
if you simply have your head down all the time doing the same thing, you
are not going to notice change when change should be noticed. Investors’
Business Daily, a newspaper devoted to hard-core investors who value a
quantitative approach to investing, recognizes this phenomena by detailing
“Ten Secrets to Success” of which two directly relate to countering inertia
(Rule #3: “Take Action: Goals are nothing without action. Don’t be afraid
to get started. Just do it.” And Rule #4: “Don’t be afraid to innovate: be
different: following the herd is a sure way to mediocrity.”).
So let’s examine a couple of case studies which illustrate the dangers
of inertia from both a company and consumer perspective. Let’s start with
myself, I happen to be a die-hard United Airlines flyer, but for the life
of me, I cannot give you a logical reason why except for one fact. That
is, I am enrolled in United’s Mileage Plus program and have been so for
over 30 years. As a Mileage Plus member, I am entitled to many different
perks from the airline as a function of the number of miles I fly in a given
year and over my lifetime. Now there is something about me that is quirky
(my wife would say there are MANY things about me that are quirky),
I often keep track of events in my life, in particular events that involve
numbers. For example, one goal in my life was driving 100,000 miles in a
2 Fiske, Susan T., and Shelley E. Taylor. Social Cognition, 2nd edition. New York: McGraw-
Hill (1991).
The Problem of Inertia 87
new car that I purchased. I have done it once with a 1998 Honda Odyssey
mini-van, and on the day we did it we had a party with friends and family
celebrating my achievement. We took pictures of the car, specifically the
odometer, put them up on Facebook and I proudly told everyone I knew
about it. Recently, I lent my 2003 Civic that I purchased spanking new
to my son who goes to school at American University, who needed a car
for the summer session. The car had 98,634 miles on it and I told my son
NOT to exceed 1,366 miles because I wanted to have the honor of reaching
100,000 miles with my foot on the pedal. He made sure he did not exceed
100,000 by totaling the car with 99,328 miles on it. For me, losing the car
was not the worst problem, the ability to exceed 100,000 hurt even more
and the fact that I missed it by 672 miles was a total disaster. So now back to
the story.
Because I am always aware of getting miles from United and because
a goal in my life is to exceed 1,000,000 flight miles with the airline, (I
have 940,303 as of this writing), I remain loyal to United and often pay
more for a ticket than I could get from a competitor. So, from a marketing
perspective, I am exhibiting brand loyalty, which may not be in my best
interest, especially given that I am writing this book, which supposedly is
telling YOU about the need to be a smart consumer. Marketers try to anchor
consumers to their brand and develop inertia, by creating loyalty programs
just like United, but the question one must ask is: are the benefits that you
get from being loyal more useful to you as a consumer than if you were to
shop around and purchase other brands? While this may seem to be an easy
choice, (that is you go for the savings), it often is not easy due to emotional
attachment to the company or to the goal you wish to achieve which may
not even be logical for others. Indeed, the more you purchase from a given
company, the more you identify with the brand, and price discounts galore
may not entice you to switch brands.3 For example, telling an Apple user
that an HP laptop is on sale for $450 less than a Mac will have little impact
on the Apple user’s purchase behavior. Getting a lifetime Harley Davidson
bike rider to ride Honda could be a lost cause — here the brand loyalty may
3 See Susan Fournier (1998) for a seminal article on consumers and their identification with
brands previously referenced.
be much too ingrained because consumers strongly identify with Harley

Davidson.
In other cases, loyalty may develop because the company has created
barriers to entry which increasingly benefit the consumer (and the seller)
with increased usage. Look no further than the online auction site eBay
where bidders and sellers create an identity (I’m “DavidJosh,” a synonym
representing the combined names of both of my sons). If you are an eBayer,
you know that remaining with the site over time benefits you, because if
you are a seller, you amass feedback from buyers each time you sell an
item. Hence over time, if you have accumulated a strong reputation, it pays
to remain with eBay so that you can strengthen your reputation even further
by selling more. Indeed, researchers from George Mason University and
the University of Arizona recently found a strong correlation between the
favorability of the eBay seller’s reputation and the price achieved for goods
at auction.4 However, they also found that a similar magnitude effect for
reputation in the negative direction that was almost four times as powerful
as a positive effect. So be careful out there when you sell . . . try to avoid
buyers from giving you negative feedback as the slope is slippery, and just
like life, reputation wise it is MUCH easier to go down than to go back
up! We previously discussed this in Chapter 3 relating to the cognitive bias
known as the “Negativity bias.” Finally, if you are a buyer, the longer you
have utilized the site, the more familiar you should be with various sellers
and the quality of the items they have offered for sale. This also acts to
enhance loyalty and inertia, making it more difficult from the point of view
of both the buyer and seller to leave the site for the competition.
While these issues discussed above suggest that one might consider
staying loyal to eBay and not consider switching to other online auction
sites, this may not be an impactful strategy. Consider the case where you
want to sell an item. Clearly, it is best to sell on eBay because this auction site
has more people registered than any other site. The more potential buyers,
4 Houser, Daniel, and John Wooders. “Reputation in auctions: Theory, and evidence from
eBay.” Journal of Economics & Management Strategy 15(2) (2006): 353–369; see also
Resnick, Paul, Richard Zeckhauser, John Swanson, and Kate Lockwood. “The value of
reputation on eBay: A controlled experiment.” Experimental Economics 9(2) (2006):
79–101.
the greater the price achieved.5 But an opportunity in arbitrage reveals itself
if you are willing to avoid inertia. That is, you can buy your inventory on
a site that has less registered users, such as Yahoo auctions (and pay less),
and sell on eBay which has significantly more registered users (and sell for
more). A monetary reward is given to you if you think fluidly and avoid
inertia.
B. Company Perspective
According to the National Diabetes Fact Sheet, over 115 million people
in America either have diabetes or are “pre-diabetic.”6 This represents
approximately one-half of our adult population, and this percentage is
growing with no end in sight. There is a segment of the population who need
insulin to control their diabetes, and suffer from a fear of injections, which
is problematic since today, this is the main way to deliver insulin into the
body, but it isn’t the only way! In 2006, Pfizer Corporation received FDA
approval to market Exubera, an inhaled insulin powder which was later
retracted from the market after it failed to achieve even 2% of its sales
estimates. But why did this new product fail? Many reasons were offered
for speculation ranging from a lack of available samples for consumers to
try the product, TV ads that were unexciting and late to market, and a lack
of inventory after the product was supposedly launched.7
But probably of the two key reasons for the failure (ones that were
not even mentioned above), related to inertia and embarrassment. For the
former, it turns out that nurses of endocrinologists play the role of certified
diabetic educators, as they are one of the main gatekeepers in the decision
to put patients on insulin. Pfizer did not market to them, and to make matters
worse, it turned out that like most new medicines, physicians simply weren’t
willing to take on something new. It turns out that many physicians in order
5 Kamins, Michael A., Valerie S. Folkes, and Alexander Fedorikhin. “Promotional bundles
and consumers’ price judgments: When the best things in life are not free.” Journal of
6 See Glatter, Robert. “Half of Adults in the U.S. have Diabetes or Pre-Diabetes, Study
finds.” Pharma and Health care Blog (September 8th 2015).
7 Please see Mack, George S. “Pfizer dumps Exubera.” Nature Biotechnology 25(12) (2007):
1331–1332.
to avoid risk, are typically conservative in their prescriptions and can be

characterized as being late adopters, typically waiting to see if someone else
is using [a drug] and only then will they try it. This is an outward behavioral
example of inertia. This of course presents a chicken and egg problem and
explains why drug manufacturers typically enlist many top physicians to
serve as representatives of the company in order to facilitate the launch of
the new drug. According to Mack (2007), Pfizer was not impactful in this
element of their marketing mix.
The most embarrassing portion of the product retraction hands down
was that the inhaler was the size of a flashlight, and many people were
embarrassed to use it in public, since it had been most humorously
characterized as a “bong.” Unless you are Justin Bieber, Willie Nelson,
Michael Phelps or Amanda Bynes, most other people would be hesitant to
use such a device in public and the sales confirmed this problem. Currently,
MannKind, a company named after Alfred Mann (a serial entrepreneur who
recently died) has brought to market the second generation of inhaled insulin
which is delivered to the lungs by a powdered inhaler called “Dreamboat.”
Despite two prior rejections by the FDA, MannKind finally received
approval for this device, which fits inside the palm of your hand, as well
as approval for their powered form of insulin called Afrezza.8 But despite
a salient attribute in the form of a novel form of delivery which avoids the
use of needles, the drug is off to a slow start despite being approved by the
FDA over 4 years ago in April of 2014. Part of this slow take-off can be
blamed on the lack of television and print advertising resulting in a lack of
awareness among key target markets inclusive of those who have diabetes,
those who are pre-diabetic, and finally nurses, general practitioners and
endocrinologists. If the company effectively addresses these failures as
their new CEO seems to be doing, they are more likely to achieve success
8 The company passed an FDA ADCOM (Advisory Committee) meeting on April 1st of 2014
with the panelists recommending approval of the device 13–1 for Type I diabetics, and 14–0
for Type II diabetics. The FDA accepted the ADCOM’s recommendation approximately
3 months later but the drug has not had success since Sanofi who originally joined in
partnership with MannKind, it is said did little to promote it possibly because of their own
set of pill based prescription diabetes drugs. MannKind ended their Sanofi agreement in
early 2016.
where others have failed. However in their case, their first few years in the
market has proven to be a challenge, possibly because consumers are not
convinced that inhaled insulin can be as efficacious as injected insulin and
possibly because of a slight cough as a side-effect. Again, inertia at work!
However, I recently saw a Mannkind commercial of all places at the Staples
Center during a Los Angeles Kings game, but is this the right target market?
Let’s go back in time to another company whose experience illustrates
the need to battle inertia to receive the rewards received when this is
effectively accomplished. Let’s go back to depression times in America
in the early 1930s. The economy was not on a roll, but the Radio Flyer
company still was selling approximately 1,500 wheeled toys (red wagon’s)
a day at that time. With company cohorts advising that Radio Flyer CEO
Antonio Pasin take a conservative approach to marketing and sales at that
time due to the dampened predictions of the economy, he debated whether
or not to develop a product tie into the 1933 World’s Fair in Chicago
whose theme was “A Century of Progress.” Pasin took a loan of $30,000
(approximately 500,000 in today’s dollars) and built a 45-foot structure
titled “Coaster Boy” which was a gigantic representation of his iconic
red Radio Flyer wagon featuring a boy searching for adventure kneeling
inside the wagon with his hand on the handle navigating the direction of
exploration. The structure doubled as a gift shop where those who visited
the fair could buy souvenir-sized Radio Flyer wagons for 25 cents each.
After all was said and done, the company had sold more than 120,000 of
these souvenirs allowing the repayment of the loan in full. But the company
did more than just break-even with this strategy as the publicity that such
exposure gave to the company resulted in positive word-of-mouth and
significant promotional gains as well as a boost in sales when the economy
turned around just a few years later and became profitable.
Asked to explain the success that the company has had over the past
80 years, the current CEO, Robert Pasin (grandson of Antonio), stated
that: “My grandfather was not nostalgic whatsoever, he would believe in
changing with the times.”9 He also noted that his grandfather advised him
9 See Sonja Carberry. “He Hitched Kids’ Dreams to His: Little Red Wagons.” In Investor’s
Business Daily, Section A, Thursday, May 29th 2014, Vol. 31(35), p. 3.
to: “Stay close to the consumer and know what they want.” Putting both
observations together suggests that a successful company must “roll” with
the times, something that Radio Flyer did and still does.
Hence, the lesson from this chapter is that one must be flexible and
fluid in one’s strategy or decision criteria, whether you are a consumer or
a CEO. The company that adjusts strategy to market conditions and the
consumer that makes decisions with their eyes open without relying on the
same old and tired decision rules is the one who will optimize as opposed
to satisfice. Let’s now visit a discussion of the 4 Ps of marketing: Price,
Product, Promotion and Place (distribution).
Chapter 7
Price and Its Influence Upon Choice
A. Introduction
My wife and I recently took AMTRAK to go from New York City to
Washington D.C. to attend my son’s graduation at American University.
I was appointed by my wife to be in charge of travel arrangements for
our trip, and because of this assignment, I noticed an advertisement in
the New York Times showing relatively inexpensive prices of $99 one way
from Pennsylvania Station to Union Station in Washington D.C. The trip
was advertised as a short 3 hours and 57 minutes one-way. I also considered
other options such as driving, but I was even too tired to think about it no less
drive it. I was also unwilling to fork over almost $50.00 in tolls, the bulk of
which would be spent just leaving the city as I passed through the Brooklyn
Battery tunnel and over the Verrazano Narrows Bridge. I also considered
the Bolt bus, but the imagery of Jon Voight sitting in the back of the bus
with a scruffy Dustin Hoffman in the old film Midnight Cowboy quickly
made up my mind decidedly to “no.” My wife chimed in and pushed for
a short plane trip, but I convinced her that by the time we arrived at the
airport and passed through the TSA, we would almost be in Washington if
we took the train. In fact, when she asked me about how long the train trip
would take and how much it would cost, I shortened the 3-hour-57-minute
trip to “about 3 hours,” and the $198 round-trip fare to “Way under $100.00
one-way honey”1
1 Note that I chose to report the one-way fare to her instead of the round-trip so that I could
further perceptually reduce the cost.
93
So just as we passed the Newark Delaware train station, I was serenaded

by my wife’s chorus of “why is it taking so long,” and if we took the plane
as I said that we should, “we would have already been there.”2 Things then
quickly got worse, when the answer was $99.00 to the question directed at
me asking, “How much did we actually pay for this delightful experience?”
“Yup,” my wife said, “that’s WAY under $100.00 for the pleasure all-right.
I’ll never believe anything you tell me about numbers again.” Now in my
own defense, I explained that my exaggeration of the length and cost of
the trip could be explained by sound academic pricing principles, but this
comment fell upon deaf ears. So I appeal to you, the reader to “hear
me out.” The pricing literature has documented a phenomenon coined
the “odd-pricing” effect which is said to occur when consumers ignore
the right most digits of a given price (i.e., ignoring the .99 in the price
$5.99 making the effective price $5.00) and/or rounding an odd price up to
an even one (e.g., rounding $7.99 to $8.00). The underlying process that
causes this effect is driven by the fact that rounding an odd price upward or
processing all of the digits of a price involves considerably more effort than
processing only the leftmost digits.3 Simply said, consumers are known to
be cognitive misers.4 So even when price is replaced by time and a train
trip takes 3 hours and 57 minutes to complete, the “odd-pricing” effect
would suggest that when conveying the information to others, one would
bias the actual time in a direction that would favor or benefit oneself. Hence
when asked, how long the trip would take, one could reasonably respond as
“around three hours,” which is what I told my wife. Similarly, if I bought
a Beverly Hills “adjacent” fixer-upper house for $999,995,5 I would tell
2 This line was repeated over and over, and was sung to the tune of “You’ve come a long
way baby.”
3 See Schindler, R.M. and Warren, L.S. “Effect of odd pricing on choice of items from
a menu.” NA — Advances in Consumer Research 15 (1988); and Quigley Jr, Charles
J., and Elaine M. Notarantonio. “An exploratory investigation of perceptions of odd and
even pricing.” In Proceedings of the 1992 Academy of Marketing Science (AMS) Annual
Conference. Springer International Publishing, (2015), pp. 306–309.
4 See Liu, Ben Q., and Dale L. Goodhue. “Two worlds of trust for potential e-commerce
users: Humans as cognitive misers.” Information Systems Research 23(4) (2012): 1246–
1262.
5 Note that in today’s market that’s a steal!
Price and Its Influence Upon Choice 95
anyone who was interested that I paid “in the 900’s for it.” That is, we will
cognitively simplify the odd number in the direction that favors the inference
or attribution that we are a “smart” or “sharp” purchaser. Alternatively, if I
wanted to impress, I’d say “close to a million.
Two University of Chicago researchers, Robert Schindler and Lori
Warren (1988), hypothesized that when given a choice between odd ending
versus even ending prices for specific items on a menu, consumers would
choose the items with the odd ending price much more frequently than
when the price was evenly ended.6 Indeed the difference between the price
of the item when it was odd or evenly priced was trivial, often accounting
to less than 5 cents on a $20.00 menu item.
Price ending was varied by constructing two versions of each menu. If

an item was odd-priced in the “A” version of the menu, then that item
would be even priced in the “B” version of that menu. Each item which
was even-priced in the “A” version of the menu was odd-priced in the
“B” version. For example, the Baked Flounder was priced at $18.95 in
the “A” version of each menu. In the “B” version of each menu, it was
priced at $19.00. The Broiled Port Chops were priced at $16.00 in the “A”
version of each menu, and were priced at $15.95 in the “B” version of
each menu. Half of the subjects in the experiment received the “A” version
of the menu and the other half received the “B” version. By this means,
price ending was varied while keeping constant the name of the item and
its approximate position on the page.
Results showed that consumers revealed a greater likelihood of choosing a

specific menu item when it was odd priced than when it was even priced.
This finding is worth reflecting upon, since not only did the consumers
prefer the price of say $18.95 to $19.00 since this reflected a saving of
0.05, they also selected the item significantly more often as a part of their
complete meal when it was odd priced as compared to when it was even
priced. This is interesting since using an odd price reflected in a more
favorable preference for an item even when compared to other menu
6 Schindler, Robert M., and Lori S. Warren. “Effect of odd pricing on choice of items from
a menu,” in Michael J. Houston (ed.), NA — Advances in Consumer Research, Volume 15,
Provo, UT, Association for Consumer Research, pp. 348–353.
entrées that were cheaper than the item itself. This means that the use
of “odd-pricing” can flat out influence menu choice. Schindler (1991) later
hypothesized that the reason for the underlying effect of odd-priced endings
was due to the fact that the consumer made symbolic inferences about the
perceived value of the item relative to the alternatives.7
So say you take your girlfriend out to a well-known chic restaurant like
Ivy in Los Angeles where regrettably in order to eat you have to turn your
gaze down toward the menu rather than looking around the dining room
to spy upon your favorite “actor”8 When you look at the menu you see
various entrées, all a la carte. For example, swordfish is priced at $46, filet
mignon is $68. And rack of lamb is $57. You think: “Well this restaurant is
so chic, that the menu has dispensed with nickels and dimes in their pricing
scheme.” But now comes some pricing/marketing magic!
Let’s say that another chic restaurant wants to get rid of their two day
old meatloaf.9 Say that they offer the meatloaf at a tempting price of $45.95.
Indeed among the 23 entrées on the menu, this is the ONLY entrée that is
priced used an “odd-pricing” technique. We already know from what we
discussed above, that consumers will most likely discount this price to say
$45.00 since they wish to simplify the price and are cognitive misers. This
makes the price perceptually, the lowest price of any entrée on the menu.
But even more importantly, they will be much more likely to attend to this
odd-price for the simple reason that such a price stands out on the menu
since it is the only price that is odd in form. So the next time you go to
a restaurant, try and interpret the price as more than just a number which
simply has a magnitude. And if you see an item, a single item on the menu
that is priced at say $XX.95 realize that you may very well be in the sights
of a marketing manipulator so that you are influenced to choose last weeks’
meat loaf and like it!
7 Robert M. Schindler. (1991) , “Symbolic Meanings of a Price Ending,” in NA — Advances

in Consumer Research 18, Rebecca H. Holman and Michael R. Solomon, (eds.), Provo, UT:
Association for Consumer Research, pp. 794–801.
8 I am just informing the reader that I am not being sexist here by saying that one tries to
find their favorite “actor.” As we are well aware, the term “actor” now refers to actors of
each gender, at least this is the case in La La land.
9 Not the singer, the food, this is Los Angeles, but let’s not get ridiculous.
B. Menu Math
As we try to avoid choosing as our dinner last week’s meat loaf, my son
notices a terrific deal offered on the menu. It seems this fancy restaurant with
the integer pricing scheme offers a “prix-fixe” set of options. That is, for
$55.00 you can choose from among a set of five different appetizers, three
different entrées (Sword Fish, Filet Mignon and Ratatouille) and a dessert
of either Key Lime Pie or Seven Layer Cake, in addition to coffee or tea. My
son quickly noted a pricing oddity however; it seems that the menu lists the
filet mignon option at $68 a la carte. Yet the same entrée when offered as
part of a complete dinner in the prix fixe version is only $55 and that comes
with choice of appetizer, dessert and coffee or tea. So, what’s going on here?
Is it possible that the prix fixe filet mignon offering is half of the size of that
offered a la carte, yet both are referred to as filet mignons? That is, is the
former more filet and less mignon? I called the waiter over to make sure and
he quickly reassured me that the steak they offer a la carte is identical in size
(8 ounces) to that offered in the prix fixe dinner. Again, I ask, “What’s going
on here?” The answer is clear and can be explained by showing that a clever
marketer can influence one’s choice among options by simply presenting
a consumer with what is called a “decoy” option, defined as an option that
is inferior to an existing option on certain attributes, such that it would
never be chosen in a head to head comparison. This was discussed briefly
in Chapter 2 of this book relating to the research of Dr. Ariely. However,
Dr. Ariely conducted an even more “sexy” experiment to show the effect
through the creation of photos of the MIT equivalent of Brad Pitt, the MIT
equivalent of George Clooney as well as the decoy Brad Pitt (with a slightly
droopy eye and thicker nose), and a decoy George Clooney (with a similar
asymmetrical face). Now, the photos were created such that female students
in general were indifferent to the attractiveness of each unaltered face, that
is, they felt that they were equally attractive when considering someone
they would consider going out with. However, when students were shown
the attractive “Brad Pitt” with the decoy “Brad Pitt” along with the attractive
“George Clooney” photo, the majority choose the MIT version of Brad Pitt
as the person they would go out with. Similarly, when they were shown
the attractive “George Clooney” with the decoy “George Clooney” along
with the attractive “Brad Pitt” photo, the majority choose the MIT version
of George Clooney. In our menu situation, the a la carte selection of the

filet mignon serves the role as the “inferior” choice, since for 13 dollars
less, one gets the entrée PLUS an appetizer, desert and coffee or tea. The
presence of the a la carte option, an option that no one in his/her right mind
would choose in the presence of the prix fixe offering, actually serves to
push customers to choose the entire filet mignon dinner. Now why would
a restaurant do this? There are a variety of reasons, possibly it is a way of
getting you to choose the option they wish because their inventory is too
high, or possibly if they do not “sell” a lot of a specific item, it will spoil?10
Now let’s consider an equal size serving of swordfish offered either a la
carte for $47, or as a prix fixe option choice for $55. Here, the deal for the
bundle is not so clear since the prix fixe offering is more expensive than the
a la carte choice. To determine if the prix fixe option is indeed a deal, one
would have to add the price of the appetizer + desert and coffee or tea, to see
if ordering the items separately is indeed more than the prix fixe. But there is
also a hidden cost to the customer in this scenario. That is, if he/she chooses
the prix fixe dinner, choices of appetizer, entrée and dessert are limited to
offered options, whereas the a la carte choices have no restrictions except
to what is offered on the menu. Alter all of this deliberation, I think I’ll have
the hamburger for $4.29 at McDonalds and don’t ask me about purchasing
the meal option!
C. Bundling
The modern concept of bundling is derived from the economics literature
of the 1960’s and the issues of tie-in sales where the firm chooses to sell
the products together as a bundle and not separately.11 A common form
of bundling is practiced by perfume manufacturers who often give away
free items (e.g., a tote bag), with the purchase of an item. Of course, the
Prix Fixe example above was illustrative of a bundle as is McDonald’s
10 I’m sorry that I could not think up more mouth-watering options.

11 Guiltnan, Joseph P. (1987). “The price bundling of services: A normative framework,”
Journal of Marketing, 51 (1987): 74–85; see also, Stremersch, Stefan and Gerard J. Tellis.
“Strategic bundling of products and prices: A new synthesis for marketing,” Journal of
Marketing, 66 (2002): 55–72.
value meal where one bundles together a Big Mac, Fries, and a drink
for a price which is typically lower than if ordered separately, although
I have not done the calculations recently to verify this. From the consumer
perspective, bundling is based upon the idea that consumers value the
grouped package more than the individual items which make up the package
and appreciate the resulting simplification of the purchase decision and the
typical discounts that grouping provides.12
Bundling offers various benefits for the seller inclusive of demand
inducement and revenue enhancement. Whether they band together or
operate as diversified entities in selling bundled goods, manufacturers
benefit from improvements in costs via scale economies. Marketing firms
and distributors who use different methods (like franchising, direct selling
and multi-level marketing) also stand to benefit through a faster turnover of
inventory. Indeed, some industries can use bundling to effectively compete
with foreign competition through the enhancement of product variety and
value.
Stremersch and Tellis (2002, p. 56) define the term “bundling” in a
marketing context as “the sale of two or more separate products in one
package.”13 These authors refer to both products and services. Oftentimes
a manufacturer will combine a cheaper (“supplemental”) item for free
with a more expensive (“focal”) item and sell the set of items for a single
price. I recently conducted research that found that describing one of the
disparate products in the bundle as “free” (i.e., the “supplemental” item)
decreased the price consumers were willing to pay for each product when
sold individually. In effect, giving something away for free in the context
of a bundle (i.e., the supplemental item) led consumers to think of the free
item in a negative light that was reflected in a reduced perception of value
12 Recently, Air France introduced the French version of anti-bundling. That is one must
purchase air-fare separately from your seat. This makes one wonder, that if a seat is not
provided with one’s purchase of airfare, exactly what product or service is being provided
when you purchase airfare from Air France for say a trip between Paris and Los Angeles?
Do they glue you to the fuselage, or attach you to the wing? Under this form of marketing
manipulation, one could easily pay for air-fare, show up at the airport and be left on the
runway or in the toilet.
13 Stremersch, Stefan, and Gerard J. Tellis. “Strategic bundling of products and prices: A new
synthesis for marketing.” Journal of Marketing 66(1) (2002): 55–72.
when the item was sold individually. However, the “freebie” also had a
detrimental effect on the focal (higher priced) item in the bundle when it was
sold individually. This was explained by the fact that respondents attributed
negative characteristics to the focal item (e.g., last season’s offering, slightly
flawed). That is, the thought process went something like this. . . “if one
had to give something away for free in a bundle in order to sell it, it cannot
be of too high quality!” Interestingly, a “freebie” offer did not influence
the consumer’s perception of the appropriate overall price for the bundle
of disparate products while it did when the bundle contained identical
products or BOGO’s (i.e., Buy One Get One free). This is because the
mental accounting needed to arrive at a reasonable price for a bundle of
disparate items is much more difficult than for a bundle of two items that
are identical.14
So how is your behavior influenced by encountering a bundle where
something is being given away for free? Well, clearly, everyone wants to
get a free gift, and that free gift can be tempting even if you never use it
or realize that you might not need it. Heck, I recently bought a new suit
because a second suit was thrown in for free. You might not think this was
strange and illogical behavior until I tell you that the store did not have a
second suit to offer me that was my size! So I still could not resist the “deal”
and eventually had to give the second suit to my friend who was glad to
have it! Consider the following script modeled after those typically used
by television pitch-men such as Ron Popeil or Billy Mays:
I’m not going to give you just this cookie cutter. Oh No! That’s not all I’m
going to give you. For the same price, I’m going to throw in a fine steel
spatula. A bargain I hear you say? But wait. . . I’m going to make it even
better, with this splendid temperature probe, absolutely free. Think that’s
great? Wait until you find out that’s I’m also including an apple corer.
Now, who wants this wonderful offer now all for only $39.99? What if I
said $29.99 or $19.99? Yes, this astounding offer is available to you now
exclusively for $19.99, but you have to act quickly. And if you call within
the next 5 minutes, we’ll DOUBLE the offer!
14 Kamins, Michael A., Valerie S. Folkes, and Alexander Fedorikhin. “Promotional bundles
and consumers’ price judgments: When the best things in life are not free.” Journal of
This approach is known as the “And That’s Not All Technique” (yup,
I’m not making this up!) and it is based on Prospect Theory.15 This theory
deals with how individuals make choices in situations where they have
to decide between alternatives that involve risk. The theory proposes that
individuals frame outcomes which differ from a reference point either as
positive (gains) or negative (losses). Consumers are said to be much more
sensitive to losses than they are to gains. So, multiple gains are perceived to
be more rewarding than single gains of the same amount, and multiple losses
are more repulsive than a single loss of the identical amount. According
to Thaler (1985, p. 202) “people try to frame outcomes in whatever way
makes them happiest,” and thinking about adding individual components
into a deal for a fixed price is extremely pleasurable because of the continual
reveal of the additive nature of the deal.16 So beware of deals where items
are added sequentially, because you will eventually give in as more items
are added and the price is reduced even if you do not need the majority of
the items offered to you!
D. Price Anchoring
A few years ago, I lent my younger son my car for the summer while he was
attending the Summer school session up at Dartmouth. Everything seemed
fine when I called him to ask him how my car was doing (Note: I didn’t
necessarily ask him how he was doing) and he told me everything was
fine. I took him for his word until I received a letter in the mail from the
Hanover New Hampshire Police Department informing me that I had 15
unpaid parking tickets and that a lien was going to be placed on my car if
I didn’t pay up. When I got my car back from my son, (or rather when I
took a one-way rental car up to Dartmouth on the DAY I got the letter to
take back my car), I was shocked to see the condition that the car was in.
Let’s just say that it wasn’t in the same condition that it was just a few short
weeks previously as both the outer and inner design had been changed, and
15 See Kahneman, Daniel, and Amos Tversky. “Prospect Theory: An analysis of decision
under risk.” Econometrica: Journal of the Econometric Society (1979): 263–291; see also
Footnote 16.
16 Thaler, Richard. “Mental accounting and consumer choice.” Marketing Science 4(3)
(1985): 199–214.
not for the better. It was at this point that I realized, I deserved a new car
and began my search for a new model.
After much online research, I had narrowed my options down to a choice
between a Volkswagen Passat and a Nissan Sentra. So, on a sunny Saturday
I decided to visit a Nissan dealer in Suffolk County near my home. As I
pulled into the parking lot, I noticed five men in dark suits and sunglasses
just standing there like vultures seconds after the lion has abandoned its kill.
This image troubled me since I knew that I had not accidently stumbled
upon a movie set for “Men-In-Black IV.” As I parked my car there was a
mad rush by these “gentlemen” to open my passenger side door and pry
me out of the car. My wife commented at the time “this is really strange.”
Little did she know or anticipate, things got even stranger and very quickly.
The first thing one of the “men in black” said was “I saw him first” and
I didn’t realize he was addressing little old me! Then he said to me that
I looked like a man who had earned the stature in life to drive the 370Z
sports car. He pointed to the car, which looked like it came straight out
of a James Bond movie and I made the mistake of asking him the telltale
question. . . “How much does it cost.” He responded: “Oh you don’t want
to know that.” I thought it fascinating that this individual who had just met
me in a parking lot of all places actually knew in advance what I didn’t
and did want to know! Maybe I shouldn’t care about the price of the car
because he was going to buy it for me for my birthday? He then continued:
“All that matters to you is how much it costs you each month, and I can
get it for you as low as $129.00 per month with our low interest rates on
preferred customer loans, and you sir LOOK like a preferred customer!”
So I guess all I had to care about now was the monthly charge for the car
as reflected on my credit card after I took out a loan from the dealership to
buy the car. I assume I should not care that the loan was for 72 months and
at that length, the interest rate was rising faster than my temper.
The selling (not marketing)17 tactic used here is called anchoring, and
for those exposed to it, such an approach can be very deceptive. That is,
17 There is a big difference between the notion of “selling” and “marketing.” Ted Levitt,
in his famous article titled Marketing Myopia argued that: “selling focuses on the needs
of the seller, marketing on the needs of the buyer. Selling is preoccupied with the seller’s
need to convert his product into cash; marketing with the idea of satisfying the needs of
the customer by means of the product and the whole cluster of things associated with
the car salesman was trying to focus my attention (or anchor my cognitive
resources) NOT on the price of the car, but actually on the cost per month of
my loan, since then I would not supposedly feel the pain as much. Knowing
that the car exceeded $50,000 with tax and license clearly would be a turn-
off in the mind of most consumers, hence the tactic to redirect focus onto
a monthly as opposed to total cost. Such a strategy is similar to the well
utilized, “pennies a day.”
We have all heard how we can subscribe to say one full year of the Wall
Street Journal or Barrons for just “pennies a day.” Indeed this is true since
if the yearly cost of such a subscription is say $299.00, then if the paper
is printed on a daily basis the per copy cost reduces to approximately 82
cents per day. Gourville (1998, pp. 395) in describing this strategy noted that
marketers engage in this tactic to “increase transaction compliance,” or more
simply to make the sale.18 That is, marketers reframe the cost of a product
from an aggregate one-time expense to a series of on-going expenses,
“often in spite of the fact that the physical payments remain aggregated.”
Essentially, the use of such a tactic creates a different reference point
for the consumer, one that appears to lower the cost of an item. That is
because the consumer’s thoughts about price are re-directed to a recurring
smaller number as opposed to the total cost of an item. With such an
approach the price seems less costly. We now turn to the concept of reference
price.
E. Reference Prices
A reference price is defined as the consumer’s internal standard against
which observed prices are compared. The behavioral foundations for the
reference price concept lie in psychology and are closely tied to Helson’s
Adaptation-Level Theory (1964).19 This theory suggests that stimuli are
judged in comparison to internal norms representative of the combined
effects of past and present stimulation. So, if you are going to buy a
creating, delivering, and finally consuming it.” Please see Levitt, Theodore. “Marketing
myopia.” Harvard Business Review 38(4) (1960): 24–47.
18 Gourville, John T. “Pennies-a-day: The effect of temporal reframing on transaction
evaluation.” Journal of Consumer Research 24(4) (1998): 395–408.
19 Helson, Harry. “Adaptation-level theory.” (1964).
chocolate cake for a friend’s party, you can derive an expectation of what
a fair price would be by considering the prices you paid in the past for that
type of cake. So let’s try a little experiment, assume that you are interested
in purchasing a ticket to see the NBA finals. You have in mind a price that
you are willing to pay for a non-“nose-bleed” seat. That is, you have a
desire to see the players from the perspective where they are at least a little
bigger than ants. You think about your home teams the New York Knicks
or the Brooklyn Nets (hopefully you don’t think about either of them for
too long), and you remember that last year when you went to Madison
Square Garden and you sat in some decent seats in the second tier during
the regular season you paid $350 for a pair. Of course this was NOT for
the playoffs, and definitely NOT the finals since the last time the Knicks
were in the finals was during Johnson’s administration (That’s Andrew not
Lyndon), and fuggedabout the Brooklyn Nets.
So, you use your recent memory and your expectations to derive an
estimate of what would be a “fair” price for a ticket to the finals in a decent
section. You use a heuristic such that you multiply the price of a decent
Knick ticket ($150) times four, and arrive at $600. As I am writing this,
a good ticket for game #3 of the Warrior–Cleveland NBA championship
series on stubhub is. . . at minimum $1,900 (not game 7 of course). Now,
I suspect for many of you reading the price level asked for the game as
mentioned made you catch your breath and for many of you, including
myself, this is way beyond what you would have expected to pay for a seat
at that game. In fact, you can choose to go with your girlfriend (or wife)
to the game or simply take her to Cancún on an all-expense paid vacation
for two, inclusive of airfare from Cleveland for approximately the same
price. Now marketers know that you have an internal price in mind for a
given item, so some of them attempt to influence that price typically in one
direction. . . upward, and there are many ways to do this some of which we
do to ourselves.
Consider for example, attending an afternoon matinee on Broadway.
Imagine sitting through a long first act and having a strong desire to drink
something just to quench your thirst during intermission. You run down the
aisle at intermission to the open bar and ask for a bottle of water, which
is given to you promptly at a price of $5.50. Now, you typically would
not blink twice at this price, because you realize that this is a “high” class
establishment and the vendor is the only option available to you to purchase
anything to eat or drink. So you begrudgingly accept the price as part of
the package of going to a Broadway play.20 Then you decide to buy some
M&M’s to munch on. Now strangely, the packaging of the M&M’s are
different on Broadway. They are in a cardboard “hard” box instead of in the
typical soft paper packaging. The vendor this time asks for $6.00, and you
go along with it for the same reasons as above, but now there is an additional
reason. You see the only time you have ever seen M&M’s in a “hard” box
is at the theater, so the vendor has prevented you from bringing to mind
other times that you have bought such a product, even when thinking about
possible occasions you have purchased it in a supermarket. In a sense, by
selling a common product in an uncommon package, the vendor has limited
your ability to derive a reasonable comparative reference price, allowing
more freedom in setting a higher price on such a product.
Finally, many sellers attempt to manipulate your internal reference price
by presenting an external one of their own. For example, certain discount
stores often use price tags that indicate two or more prices. The first price,
often crossed out by a diagonal line indicates the price the item is supposedly
available either somewhere else (i.e., “compare at”) or the price at full retail
(i.e., MSRP). Then the store’s price is indicated as “our” price that is usually
lower than the external reference price offered. Sometimes, the reference
price seems ridiculously high, such as for designer corduroy pants recently
advertised on a Macy’s website “originally” for $95 but marked down to
$19.00. Now while many consumers may not believe the “original” price,
the discount of approximately 80% may be too hard to resist. So if you see
me wearing corduroy pants that are two inches too high on my legs, which
only fit when I breathe in, you now know why this happened and it wasn’t
because I wanted to imitate the late Jerry Lewis although I have been told
that I look like him!
So how do we as consumers protect ourselves from having our internal
reference prices manipulated. The answer lies in the degree to which we are
anchored to our own internal reference price. That is, how strongly do we
20 You also say to yourself: “What the heck, I amazingly got these two tickets to ‘Hamilton’
for the cool price of $2,500, so why worry about a $5.50 bottle of water?”
believe in it? This is a function of the experience we have in purchasing the

specific product under issue, and the extent of research we do evaluating and
generally accumulating knowledge about competing brands. Such extensive
brand search should be the strategy for the purchase of any high priced item
or any item where financial, social, physical or time based perceived risk is
present. If you conduct such research, you will be a more astute consumer
since you will be able to either discount the influence of, or accept the
reference price that the seller throws at you!
F. Price–Quality Relationships
At Stony Brook University, my graduate students recently ran an experiment
where student subjects were recruited and asked to taste a beer that had been
poured from a refrigerated steel keg container, identical to what would
happen at your local bar & grill. In one keg, the students had added a
vegetable food coloring that made the beer darker without impacting its
taste, but were accurately told that it was indeed domestic Budweiser. The
second keg, contained Budweiser beer as you would buy it at a specialty
store that sold kegs and was described accurately as Budweiser and did not
have any coloring added. The third keg contained the same Budweiser beer
as in the other two kegs, but was described as Belgium Budweiser which
was very recently imported into the USA. This description of country-
of-origin was not randomly determined, as in 2008, the maker of Budweiser
beer, Anheuser-Busch, was indeed purchased by a Belgian company by the
name of Inbev. Finally, keg four again contained Budweiser beer, but was
described as an imported beer from Germany costing $14.99 per six pack
as opposed to $3.99 for regular Budweiser and now sold in kegs.
One hundred respondents, who had claimed to be beer drinkers, were
then asked to drink one cup of beer (8 ounces) from one of the kegs
determined at random, and then to answer a few questions about the beer.
Clearly, the experiment could not have required the respondents to drink
8 ounces of beer from EACH of the kegs since then it is not clear if the
participants could then put their thoughts clearly down on paper, but then
again these are college students so I’m sure that they would have no problem
doing this at all. Respondents were asked two questions; first, they indicated
on a seven point scale the degree to which they liked the beer from (1)
TABLE 1: Experimental Findings for the Stony Brook Beer Study
Dark Bud Regular Bud “Belgium” Bud “German” Bud

n = 25 n = 25 n = 25 n = 25
Liking M = 4.80 M = 2.65 M = 4.86 M = 6.12

Quality M = 5.21 M = 3.24 M = 5.28 M = 6.37
totally dislike to (7) enjoyed immensely. They were also asked to indicate
the overall quality of the beer from (1) poor to (7) excellent. The findings
of the study are presented in Table 1.
The data is interesting mostly because the underlying beer is the same
across all four experimental cells. When a color additive was applied to
the brew (which apparently did not change the taste of the beer), it made it
darker apparently suggesting to the respondents that it was a beer of more
substance and hence was evaluated more favorably on both “likeability” and
“quality” when compared to the “regular” unchanged Budweiser presented
in cell 2. Belgium Bud (also despite its description was the good old
American version) was rated similarly as high as the “dark” Budweiser.
However, when the beer was described as imported from Germany and of
high price, respondents rated it highest among the set of four beers after
tasting it. The data clearly reveals that consumers can be manipulated by
product description, despite the fact that the underlying product in each of
the cells was THE SAME.
Such a study was first introduced into the marketing literature back in
1968 by J. Douglas McConnell, then a marketing economist at the Stanford
Research Institute. McConnell varied the price of a six pack of beer across
three different unidentified brands (M at $1.30, L at $1.20 and P at 0.99)21
finding that subjects evaluation of the respective beer became less favorable
as the price of the identical beer declined. That is, 56.7% of the words used
to describe the most expensive beer were favorable, while that dropped to
47% for the middle priced beer and 36% for the most inexpensive beer.
21 This was 1968 after all. Try and get a six-pack today for 99 cents, and if you do, imagine
what the typical consumer would say about the quality of such a brand. See McConnell, J.
Douglas. “The development of brand loyalty: An experimental study.” Journal of Marketing
Research 5(1) (1968): 13–19.
Again, aside from the price as indicated, the beer was identical. So once
again, consumers were duped by focusing on price as an indicator of quality.
So how can we avoid this price quality evaluative tendency? Research has
shown that consumers will be less sensitive to price–quality linkages if the
cost of searching for brand information is reduced. As noted by Lynch and
Ariely (2000, p. 85):
A well-constructed electronic shopping site can provide a vehicle for
conveying non-price information related to quality that is superior to the
comparable information that can be gleaned from shopping in conven-
tional malls, catalogs, etc. The consequences of better differentiating
information should be like the effects of differentiating advertising.
Advertising can convey differentiating information that reduces consumer
price sensitivity.22
Price sensitivity has been shown to increase when comparative advertising

is used between stores offering the same or identical products. Such a
situation naturally directs the consumer’s attention to finding a better
deal, since all other factors are held constant. However, if consumers
are comparing two different product offerings where other information is
shown to vary between products, such as country-of-origin, brand name, fat
content, calorie content or type of material used, then a simple price/quality
inference is more difficult to make. Here, consumers must evaluate based
not on a simple heuristic but rather on information involving the weighting
of various information inputs, a more difficult job.
22 Lynch Jr, John G., and Dan Ariely. “Wine online: Search costs affect competition on price,
quality, and distribution.” Marketing Science 19(1) (2000): 83–103. Only the words in this
sub-section of the paper were included, Lynch and Ariely’s internal references were deleted
for readability purposes.
Chapter 8
Deceptive Products: Consumer Confusion,

Secondary Meaning and Dilution
A. Introduction
Way back in time, some 30 years ago when Bruce Jenner was famous for
having become the 1984 Olympic Decathlon Champion, he appeared in a
series of television commercials for Tropicana Premium Pack orange juice.
In one of the commercials, he was shown squeezing juice from an orange
and pouring it into a Tropicana carton, saying, “It’s pure pasteurized juice
as it comes from the orange.” Clearly, the commercial was playing upon
Mr. Jenner’s (at the time) chiseled body and hand strength, since few people
could take an orange in the palm of their hand and squeeze it, extracting
all of its juice.1 The message to be conveyed was that Tropicana, unlike
other leading brands, was not made from concentrate. Coca-Cola, which
still produces rival Minute Maid, sued.
The court found this visual sequence to be false because Tropicana juice
was not squeezed from the orange directly into cartons, as the commercial
depicted; it was pasteurized and sometimes frozen first. The court also said
that Jenner’s qualifying voice-over was insufficient because “pasteurized
juice does not come from oranges.” The judge granted an injunction,
1 If you need to pass a few minutes with nothing to do, you might consider trying this, it is
harder than it looks and awfully messy.
109
and the advertising which conveyed this message was removed from
the air.2
B. Consumer Confusion
Similarly, in the battle of the handbags, Louis Vuitton sued Dooney &
Bourke claiming that the latter’s multi-colored DB bags (pictured to the
right in Figure 1) were similar to Louis Vuitton’s (pictured to the left)
colorful and successful Murakami bags.3 The argument from Louis Vuitton,
based on the Lanham Act’s application to consumer confusion, was that
Dooney and Bourke’s product confused consumers into thinking they were
made by Louis Vuitton. The case took a long 4 years to come to the
conclusion with the judge ruling in favor of Dooney & Bourke. Judge
Shira Scheindlin argued that Vuitton’s LV mark used a larger font size and
consisted of a “combination of letters and shapes” while the Dooney &
Bourke design featured an unadorned DB. Despite the judge’s conclusion
that there would be no confusion between the handbags, it is reasonable to
understand why Louis Vuitton brought suit in the first place, since at first
FIGURE 1. A Comparison of Dooney & Bourke and Louis Vuitton Handbags

Source: Adapted from Dooney & Bourke and Louis Vuitton.
2 Today, if Caitlyn Jenner were to attempt the same commercial, I suspect it would still be
determined to be deceptive even if she were to step on the oranges with her high heels in
order to extract the juice.
3 See 454 F.3d 108 (2d. Cir. 2006) Lex: 454 F.3d 108; Louis Vuitton Malletier V. Dooney &
Bourke.
Deceptive Products: Consumer Confusion, Secondary Meaning and Dilution 111
glance and without much thought the bags do seem similar at first look. This
leads us to the question as to why one company would produce a product
that looks similar to another or present a claim that leads consumers to think
something about a product that may not be the case.
Clearly, the answer lies in the fact that the infringing company may
want to “piggyback” off of the reputation of another brand by confusingly
making their product appear similar to that of the other successful brand. If
an infringing brand accomplishes such an objective, they can shine in the
reputation of the other brand without having to pay the significant cost to
develop a stellar reputation themselves. Moreover, if a brand can encourage
consumers though visual or other means to make a false (but beneficial)
inference about their product, they can benefit from such false inferences
up until the point that they are prosecuted for it, if ever. That is, the brand
or company that is the victim of another may be the smaller company
and may not have the funds necessary to defend their product. Sometimes,
as a consumer it is difficult to determine what action to take in order to
protect oneself from products that can be potentially dangerous. In this
regard, about 10 years ago, I testified as an expert witness in a famous case
involving a class action lawsuit relating to the Ford Motor Company and
indirectly the Firestone Tire Company. The case literally revolved around
the fact that many people had lost their lives or had been injured as a result
of rollovers involving the Ford Explorer built between 1990 and 2001. At
trial, fingers were pointed at both companies, with testimony claiming that
the source of the problem emanated from a high center of gravity for the
vehicle itself and Ford maintaining that the tire, specifically the Firestone
Wilderness AT tire, had inherent defects that caused the tread to separate
from the base of the tire at high speeds.4
Ford internal documents show the company engineers recommended
changes to the vehicle design after it rolled over in company tests prior to
introduction, but other than a few minor changes, the suspension and track
width were not changed.5 Instead, Ford, which set the specifications for
4 See Joseph S. Enoch at consumeraffairs.com (April 16th 2008), “Ford Class Action
Settlement Leaves Consumers in the Dust.”
5 Available at: http://www.autosafety.org/ford-explorer-firestone-tire.
the manufacture of its tires, decided to recommend that the user remove
air from the tires, lowering the recommended pressure to 26 psi.6 Low air
pressure can lead to increased heat; and heat can damage the tire causing a
separation of the tread from the base.7 So as a consumer, do you believe the
car manufacturer that its product is inherently safe, or do you believe the
tire manufacturer who maintains that their tires are made to quality safety
standards? Firestone, in their defense, ultimately replaced 2.8 million of
their Wilderness AT tire at a significant cost to the company, both financially
and reputation wise, yet if the car is inherently flawed, such an action still
does not resolve the problem. My task as an expert witness in advertising
during the case was to review all of Ford’s advertising for the Explorer,
inclusive of their print ads, television advertisements and brochures handed
out at the dealerships in California to determine if Ford ever advertised that
the Explorer was a safe car to consumers either implicitly or explicitly.
When, I testified to California District Judge David DeAlba that safety was
explicitly mentioned in a brochure about the car’s specifications given to
consumers at the dealership,8 the opposition’s expert noted that brochures
are simply “distribution” and not advertising. To this, the judge strongly
noted that this point cannot be argued since California law designates
brochures as advertising. In fact, brochures are possibly the most important
form of advertising that consumers’ process in their path to purchase, since
they are typically the last element of printed information that they consult
before making the purchase. The result of the trial and my 2 days on the
stand was a case settlement for consumers of four states: California, Illinois,
Connecticut and Texas.
C. International Branding and Branding Issues

The Lanham Act in part, applies to situations where the goods of one
company or manufacturer are likely to cause confusion, or to cause
6 Ibid.
7 Available at: http://www.kendatire.com/en/automotive/tire-101/.
8 It was also implicitly prevalent throughout Ford’s print advertising of the Explorer, showing
numerous print and television advertisements where the car would go up mountain roads at
speed under difficult driving conditions.
mistake, or to deceive as to the affiliation, connection, or association with

another company or manufacturer with respect to the origin, sponsorship,
or approval of those goods. An important restriction of the act is that it
cannot however persecute those violators who are operating companies
based overseas. Consider the following example. Imagine you decided to
go on vacation to mainland China and you came across a store in a high
priced mall in Shanghai, with the name “Chrisdien Deny.” The store sold
what appeared to be designer items such as high priced shoes and leather
goods. It also was very nicely decorated, n’est-ce pas? With images of
France interspersed among the merchandise. To top it all off, even the font
style and design of the brand name looked coincidentally similar to a famous
French brand of high couture, that of Christian Dior. Coincidence? I don’t
think so, yet I’m sure that “Chrisdien Deny,” would certainly deny that they
were guilty of trade dress infringement. But what is trade dress infringement
in the first place? Trade dress is a legal term of art that generally refers to
characteristics of the visual appearance of a product or its packaging that
signifies the source of the product to consumers.9 As such, trade dress is a
form of intellectual property. Now upon seeing this store, consider whether
or not you would think that the “Chrisdien Deny” brand was the Chinese
subsidiary of the “Christian Dior” brand as licensed for China, or would
you think it was simply a knock-off of the Christian Dior name? Either
way, my guess is that consumers would be confused about the source of
the brand, but since the offender lies across international borders, getting
restitution becomes significantly more difficult.
There are other international brands out there, which literally might
leave you rubbing your eyes in disbelief. Consider the trendy Chinese
sunglasses and eyeglass retailer called “Helen Keller” YES, I SAID
HELEN KELLER, with the slogan: “You see the world, the world sees
you.” Now aside from the fact that Ms. Keller could not see or hear, making
“You see the world” quite difficult if you were her, it seems that her name
and image makes attractive fodder to attach to of all things eyewear, at
least in China. But I wonder if the estate of Helen Keller is pleased that
9 Merges, Robert P., Menell, Peter S., and Lemley, Mark A. Intellectual Property in the New
Technological Age, 4th rev. edition. New York: Wolters Kluwer (2007) p. 29.
her name has been misappropriated to represent of all things an eyeglasses

company? However, probably the best example of trade-dress violation
by foreign vendors is illustrated by “Johnnie Worker Red Labial Scotch
Whiskey?” made by the world famous Scottish brand “Yantai Tianchi
Winery Company.” Of course, “labial” may either refer to the lips, or
to the female genitalia, let’s hope that the creators of the brand had the
former and not the latter in mind, although maybe this was an intended as a
subconscious and under the radar attempt to appeal to the male population?
Whether or not males were the intended target market, when one examines
the color of the packaging (red and gold) as well as the font style and
name “Johnnie Worker,” there is clearly one brand that these violators
had in mind. . . . Johnnie Walker of course! Note that the use of similar
packaging and colors is designed to mimic the “secondary meaning” of the
company and its brand and it is illegal in the United States to violate the
protectable and distinctive “trade-dress” of the brand.10
While Westerners may think that such brand names are ridiculous, as
reported in a New York Times article there is a method to such apparent
madness. That is, rather than create distinct branding, local (Chinese)
companies have chosen simply to mimic well-known foreign brands.
“Chinese brands copy because they believe it enables them to get an easy,
quick win,” said Vladimir Djurovic, President of the Labbrand Consulting
Company in Shanghai. “They play on the confusion.”11
When reached by phone, a brand manager for the Helen Keller brand
of eyeglasses explained to the New York Times reporter that Helen Keller’s
personal characteristics were unimportant for her brand image. She stated:
“So she’s blind and deaf — her personal shortcomings are not related to
the spirit of our brand,” She added: “These products help you love and
protect your eyes. Why would that be offensive?” For the case of Chrisdien
Deny, the New York Times reported that a representative for the brand
10 A brand’s trade dress is defined as the characteristics of the visual experience of the
product, service or its packaging. Likewise, “secondary meaning” relates to the ability to
identify the brand without the reliance on its brand name.
11 Please see the full article by Dan Levin, as published in the New York Times (International
Business Section) of December 26th 2014 titled: “Adidos and Hotwind? In China Brands
Adopt Names to Project Foreign Flair.”
apparently denied that the brand was trying to piggyback on the reputation
of Christian Dior, which has dozens of stores in China stating: “I’ve never
heard of that company,” the representative said. If you traveled to Korea, the
brand names do not get any better. Consider the fashion clothing line called
“Scat” and the respective magazine featuring it called “Rolling Scat” who
“coincidentally uses the stylized font front page mast of the USA magazine
Rolling Stone. Yes, we all know what that term means and I’m not going
there, but according to the brand website it means Sexy, Cute, and Cat
Cat . . . whatever. Moreover, we can all be thankful for the fact that cows
don’t fly for the same reason that “scat” does not normally roll. Clearly, the
magazine is an attempt to knock-off “Rolling Stone,” as it does its best to
copy the “trade-dress” of this magazine defined in general as a product’s
physical appearance including its design, shape, color, texture, and size.
We will discuss “trade-dress” later on in this chapter.
While detecting the falsity of these brand names may be easy for
Westerners when visiting foreign countries, when product from such
countries comes here and is sold under original brand names on various
websites, the detection of real versus counterfeit merchandise is more
difficult, and is damaging American commerce. For example, there are
now websites sponsored by original manufacturers telling consumers how
to detect the real item.12 In addition, there is sometimes a detailed section on
counterfeit products, along with images of such inferior quality products on
the website of the original company. Canada Goose, a maker of high-quality
parkas and jackets comes to mind.
D. Secondary Meaning and Trade-Dress

Imagine that you were minding your own business on the New York
subway and as you looked at the advertising in front of you, the following
advertisement as illustrated in Figure 2 below, caught your attention. Now
for those of you who are familiar with New York, this is a play on words for
a famous slogan associated with the borough of Brooklyn, that appears as
12 For example, for Louis Vuitton products, please see http://servingnotice.com/L8dxn9/

index.html.
FIGURE 2: Brooklyn Snickers (© Mars, Incorporated. All Rights Reserved)
you leave the borough on a sign adjacent to the Belt Parkway. That slogan
is “Fuhgeddaboudit!”13
At first glance, you may not know the source of the advertisement, or
even what is being advertised, but with a little thought and the activation
of some memory associations based upon your experience as a consumer
of candy bars, you conclude that this is an advertisement for “Snickers”
candy bar. So, what gave it away? Well to start with, the chocolate brown
color which makes up the background for the advertisement represents the
color used in the majority of the actual wrapping for the bar. In addition,
the slanted dark blue writing and the particular font, are identical to that
used for the actual brand name writing on the wrapper (this is called the
“trade-dress” of the brand).
What Snickers was doing is playing off of their famous “trade-dress”
to tease consumers and make them process the advertising in the context
of images about the brand that first come to mind. Essentially, Snickers
has established “secondary meaning” in that the brand image is so well
13 The slogan shown to those who enter the borough after crossing over the Verrizano
Narrows bridge from Staten Island is “How Sweet It is,” made famous by a famous Brooklyn
native by the name of Jackie Gleason.
known to the general public, through advertising or other exposure, that

the image is now identified with a single source. Now Consider the famous
brand Coca-Cola, and try to think in your mind what the famous glass bottle
looks like. . . .14 now if you can imagine the famous Coca-Cola “Hobble-
Skirt” glass bottle, but did not see the brand name, do you think that you
would associate it uniquely with Coke? That is, outside of the brand name
itself, there is a strong “secondary” association of the product with a specific
brand. In the case of Coca-Cola, it is the famous bottle shape, in the case of
Snickers it is the package color and the distinctive slanted blue capitalized
font style. This is part of the intellectual value of the brand.
Now imagine you came across the following billboard as illustrated in
Figure 3 while driving on the freeway in Los Angeles.
Again, here is a company playing off of their famous trade-dress. Are
they advertising smiles? Is this an advertisement for a paint company
near UCLA? Again, triggering recognition with previous exposure leads
most consumers into finally realizing that this is an advertisement for
FIGURE 3: The Inquisitive Smile, with permission from Kraft Heinz Food Company
14 This famous shape of the Coca Cola bottle is known as the “Hobble-Skirt” bottle this
is because the general shape of the bottle was seen to be similar to a dress from the early
1900s. The dress was so incredibly narrow below the knees that it restricted one’s normal
movement — causing a woman wearing the skirt to hobble when walking.
Kraft Macaroni and Cheese. Counting on their strong secondary meaning

both in terms of the color that Kraft Foods uses consistently in their pack-
aging and the familiar shape and color of their macaroni, the combination
provides a big clue for the consumer as to what is being advertised placing
the happily curved macaroni in perspective. The notion is that you or your
children will also have a big smile when you consume the product, hence
the tag line “you know you love it,” so indulge your desire.
So how does all of this relate to how the consumer interprets
advertising? The answer is, that we as consumers use various clues to
provide us with important information regarding the inferences we make.
As Kahneman wrote in his book, “Thinking Fast and Slow” many times the
overtaxed and cognitively constrained consumer uses simple heuristics to
arrive at inferences. This involves the System I approach to decision-making
that we discussed earlier on in this book. Relying on simple heuristics such
as color and package font size or style to determine which brand one is
looking at is potentially problematic for the consumer if copycats use such
factors to deceive you into thinking that they are indeed the brand you are
searching for. The solution is to bring other, often contextually based factors
linked to the brand into play. Again, as has been mentioned numerous times
in this book, this suggests that you as a consumer should take a deeper
and more proactive look into your purchase decision by relying upon more
information about the product or brand than simple heuristics. For example,
a shirt that has the famous “crocodile” insignia of LaCoste, may not be that
brand, especially if it is purchased in a context where one typically would
not find such a brand sold (e.g., a discount clothing store or an untrustworthy
website). Devious marketers are relying upon you to convince yourself that
you made a once-in-a-lifetime purchase of a “name” brand for the price of
peanuts, yet the old adage is true, in that when it is too good to be true, it
often isn’t.
E. Dilution
Trademark dilution is a trademark law concept giving the owner of a
famous trademark the basis to forbid others from using that mark in different
product categories in a way that would lessen its uniqueness. In most cases,
trademark dilution involves an unauthorized use of another’s trademark on
products that do not compete with, and have little connection with, those
of the trademark owner. In this sense, it is different than the establishment
of confusion, since in most confusion cases the products compete within
the same industry or product category. One of the most famous cases of
trademark dilution, and clearly one of the most interesting was that of
Moseley V. Secret Catalogue, Inc. more famously known as Victor’s Little
Secret versus Victoria’s Secret. I suspect now I got your attention, and
the case amazingly also got the attention of the U.S. Supreme Court.15
The action started innocently enough! That is, in the February 12, 1998,
edition of a weekly publication distributed to residents of the military
installation at Fort Knox, Kentucky, petitioners advertised their “GRAND
OPENING Just in time for Valentine’s Day!” of their store “VICTOR’S
SECRET” in nearby Elizabethtown. The ad featured “Intimate Lingerie for
every woman;” “Romantic Lighting;” “Lycra Dresses;” “Pagers” and “Adult
Novelties/Gifts.” Id., at 209. An army colonel, who saw the ad and was
offended by what he perceived to be an attempt to use a reputable company’s
trademark to promote the sale of “unwholesome, tawdry merchandise,” sent
a copy to Victoria Secret, who began the action. In making its decision, The
District Court rested on the conclusion that the name of the petitioners’
store “tarnished” the reputation of the respondents’ mark, and the Court
of Appeals relied on both “tarnishment” and “blurring” to support its
affirmance.16 However, the Supreme Court reversed the decision, noting
that there was absolutely no evidence of any lessening of the capacity of
the Victoria’s Secret mark to identify and distinguish goods or services
sold in Victoria’s Secret stores or advertised in its catalogs due to Victor’s
actions. Moreover, according to the court, there was no evidence that
the presence of Victor’s Little Secret stores harmed Victoria Secret’s
reputation.
15 One wonders if his case simply found its way to the Supreme Court, or if the Supreme
Court purposely sought it out to eliminate boredom on the bench. The case is identified as
Moseley v. Secret Catalogue, Inc. (01-1015) 537 U.S. 418 (2003) 259 F.3d 464, and was
reversed and remanded from the decision made by the district court.
16 Dilution by blurring is defined as an “association arising from the similarity between the
mark or trade name and a famous mark that impairs the distinctiveness of the mark.”
Clearly, when one sees the clothing or (lack of clothing) that the
“Victoria’s Secret Angels” wear, in my opinion, it borders on the intimate
apparel merchandise that Victor’s Little Secret sells, hence dilution by
tarnishing seems a remote possibility. But for the consumer, the crux of the
issue is that a distinction must be made between companies who are selling
their wares and others who try and copy that trademark or dilute it. For
example, if an individual were to create the “Apple” Clothing Company,
in order to attach the great brand equity of the Apple brand to the new
clothing brand, it may be unlikely that an apparel consumer would believe
that Apple clothing was made by the high-tech company, yet the possibility
exists, especially if that fictitious company were to name their pants as ipants
and their blouses as iblouses. The bigger issue would be that the presence
of the Apple line of clothing would dilute the clear and concise image that
a consumer may have previously had of Apple, since now they must make
room in their mind for the image of Apple clothing when thinking of Apple.
Finally, someone who has an idea to parody another company may be
guilty of dilution if tarnishment of the original mark has occurred. Some of
you may recall the advertising for “Wild Kingdom” which was an animal
adventure show taking place typically on safari in Africa, hosted by Marlin
Perkins and sponsored by Mutual of Omaha insurance. The defendant in this
case spoofed Mutual of Omaha by creating the brand “Mutant of Omaha”
supposedly a firm created to insure people in case of a nuclear holocaust.17
FIGURE 4. Mutant versus Mutual of Omaha

Source: Adapted from Mutant of Omaha and Mutual of Omaha.
17 See 775 F 2d 247 — Mutual of Omaha Insurance Company v. Novak.

Figure 4 shows the logo of both firms. The name was applied to shirts,
appeared on caps and coffee mugs using a side view of a feathered-bonneted
emaciated head as opposed to Mutual of Omaha’s American Indian head.
The court maintained that there could be confusion between the two marks,
in part because Mutual of Omaha also used caps, t-shirts and coffee mugs
to place their logo. Be on the lookout for these knock-offs as they may sell
for a lot of money on eBay!
As we focus on product deception and potential manipulation, let’s
now examine a set of products all of us MUST buy sometime...prescription
drugs. Let’s see what big pharma is up to in our next chapter.

Chapter 9
Marketing Manipulation by the Drug Companies

is Enough to Make You Sick!
A. Introduction
Early this morning, I awoke to the sound of a phone call at 7:30 a.m. by
a telemarketer telling me that I had won a free necklace. But this was
not your regular gold or silver necklace, or even the swash buckle kind
made of turquoise and silver in New Mexico by the Zuni Indians or by
Captain Jack Sparrow. No . . . my necklace had a round charm on it with
a button in the middle which I could press if I needed immediate medical
attention. The woman on the line went on and on telling me how I needed
this necklace and I couldn’t think of how to shut her up until an idea
flashed in my head. I simply told her that I “fell down and couldn’t get
up” and needed immediate medical attention and the use of my phone to
call 911. Instead of telling me that I would have been saved if I had agreed
to purchase the necklace weeks ago, she immediately excused herself, got
off the line and I went back to bed. Even at the ripe old age of 65, I need
my sleep.
A day later, I got a post card in the mail, telling me that I could be buried
at sea, and aside from the honor of being called “Captain Kamins” the rest
of my life, I began to put two and two together. Someone out there, with a
mailing list and phone book thinks I am very old and almost about to die,
so maybe I better begin to pay a little more attention to the drug company
commercials when they come on TV, if I am to at least stand a chance
123
of living for the next week or two.1 But as it turns out, pharmaceutical
company advertising can be confusing and with the tactic of Direct-to-
Consumer (DTC) advertising, can motivate consumers to request drugs
when they don’t even have any disease.
According to a report by CBS News Healthwatch, based on scholarly
publications, nearly a third of all adults initiated discussion with their
doctors about drugs they saw advertised on television, with approximately
half of those adults receiving a prescription.2 Back in 1999, DTC advertising
on behalf of big pharma amounted to $791 million,3 while in 2016 it
rose almost seven fold to over $5 billion dollars4 Indeed, advertising from
the pharmaceutical industry is especially effective in motivating purchase
from the perspective of the prescribing doctor, consider the fact that when
surveyed by the FDA, 58% of physicians thought that DTC advertising
made the drug advertised seem better than it is.5 Consider that those
surveyed here were PHYSICIANS and not the potential consumer who
arguably is less educated and might be even more susceptible to the effects
of advertising! In addition, prescription drugs that are supported with DTC
advertising have in the past been shown to grow in terms of the number
of written prescriptions by seven times faster than drugs not supported by
DTC advertising.6
So, consider this advertisement for the Purple pill (first Prilosec and
then Nexium). Here, we see lots of people standing on rocks and looking
out to sea while the waves break in the background. We assume that this is
somewhere on the beautiful California coast or maybe even Hawaii. This
image would make anyone want to go to this place, and then we hear the
1 This was also a motivation to complete the book more quickly.

2 Mintzes B, Mangin D. “Direct-to-consumer advertising of prescription medicines: A
counter argument.” Future Medicinal Chemistry 1(9) (2009): 1555–1560.
3 Porter, Dayna M. “Direct-to-consumer (DTC) pharmaceutical marketing: Impacts and
policy implications.” SPNHA Review 7(1) (2011): 51–70.
4 Rebecca Robbins. “Drug Makers Now Spend More than 5 Billion Dollars on Advertising,
here’s what that buys.” StatNews.com, September 3rd 2016.
5 FDA website, U.S. Food and Drug Administration, the Impact of DTC Advertising.
6 Sheehan, Kim. Controversies in Contemporary Advertising. Thousand Oaks, California:
Sage Publications (2004), pp. 209–215.
Marketing Manipulation by the Drug Companies is Enough to Make You Sick! 125
announcer saying:
“Do you know about the purple pill called Nexium? (announcer)
(1) I know. (person standing on rock #1)

You should know about it too, ask your doctor about how the Purple
Pill can help you. (announcer and end to commercial).”
Now, when I first saw this advertisement, I had absolutely no idea what
was being sold, but if all of these people took the purple pill and ended up
on a rock right on a beautiful coastline in Hawaii or California, then that
was better than sitting in my apartment in Long Island with the shades down
and the air conditioner on. In other words, the ad got my attention, and as
we know in advertising, cognition or awareness is the first component that
must be gained if an ad is to have an impact on behavior. That is, one must
know about a product before one can buy it. So as a result of seeing the
commercial on many different occasions, I went to my doctor and asked
him if “the purple pill can help me.” He told me that it could only help me
if I had GERD. I told him that I had no German relatives living with me by
that name, and he quickly explained that the Purple Pill was a prescription
for Gastro Esophageal Reflux Disease, which I did not have.
I’d simply have to end up on a rock in California some other way.
B. The Case of Rezulin

All kidding aside, the fact that nearly a third of consumers initiated a
discussion with their doctors about drugs they saw advertised, and that
approximately half of these individuals received a prescription is rather
alarming.7 It suggests that many individuals are getting prescriptions for
diseases that they may not have. Now, while someone who takes cold
medicine in order to minimize or prevent a cold may not seem to be engaging
in harmful behavior, what if one were to take a prescription for diabetes
7 Ventola, C. Lee. “Direct-to-consumer pharmaceutical advertising.” Pharmacy & Thera-

peutics 36(10) (2011) 669–674; 681–684.
if they did not have the disease, would that seem benign? It turns out that
this actually happened in the case of the prescription drug Rezulin, with
a significant percentage of users taking the drug without having diabetes.
I know these facts because I served as an expert witness in a class action
lawsuit filed against Warner Lambert Company and Pfizer (the company
that inherited the drug after it purchased Warner Lambert). Now, during my
deposition in this case, the opposing attorney asked me a question along the
following line: Do you believe that if X% of users take a prescription drug,
but do not have the underlying disease that the drug treats, that this is a small
percentage? My answer was that if X% of individuals take a potentially
harmful drug that they do not need, then this is a very LARGE number
since they are then subject to side effects that they needn’t be. Surprised,
he asked me then what in my opinion would be a large percentage when it
came to consumers taking a drug that was used for a disease they did not
have, and I replied . . . anything over 0%).
In this particular case, the problem with taking Rezulin, especially
for those who did not need to, was that it was directly linked to 90 liver
failures and 63 deaths, and was taken off the market.8 But the question
remains, why were so many individuals taking this drug if they didn’t have
diabetes in the first place? The answer lies in marketing manipulation.
Rezulin was promoted as a drug that could have the potential to PREVENT
diabetes and there are many individuals in this country who have been
categorized as “pre-diabetic.” In a pre-launch advertisement for Rezulin,
the advertisers asked: “Is it possible to specifically treat or even prevent the
insulin resistance associated with type II diabetes?” Later in a press release
about the drug, the Parke–Davis division of Warner-Lambert claimed that:
• Rezulin® is the first anti-diabetes drug designed to target insulin

resistance. . .
• Rezulin® is the first drug to work at the cellular level to improve
insulin resistance directly-enhancing the effects of circulating insulin. . . .
Until now, other therapies lowered blood glucose by increasing insulin
production or decreasing hepatic glucose output.
8 David Willman. “Diabetes drug Rezulin pulled off the market.” Los Angeles Times, March
22nd 2000.
These claims were later found to be misleading by the FDA, but it is

easy to see how they contributed to making Rezulin one of the faster selling
drugs in history, with sales of close to $76 million 4 months post launch.
A focus on the positioning of the drug explains why many individuals
used it in spite of not having the disease. In order to determine whether
one has diabetes, a blood glucose indicator called the A1C is evaluated.
This measure tracks the average blood glucose level in one’s body for the
previous 2–3 months. If it falls below 5.7%, one’s blood glucose level
is considered “normal,” a number between 5.7% and 6.4% is classified
as “pre-diabetic” and a level exceeding 6.5% or more classifies one as
having diabetes. Imagine if you will, a drug that claims to work “at the
cellular level” designed to improve insulin resistance such that the insulin
produced by the pancreas can be more effectively and efficiently used to
lower circulating blood sugar. In effect, such a drug (i.e., Rezulin) can be
easily perceived by the non-knowledgeable consumer as serving to prevent
diabetes. That is, such a drug does not simply lower blood glucose and
leave the foundational problem untouched, it purportedly works at the
“cellular” level to make your insulin work better, preventing and possibly
curing diabetes. Therefore, if you are worried about your sugar intake (and
don’t have diabetes) and concerned about the potential of getting diabetes,
or alternatively are pre-diabetic, why not use a drug that can cure the
problem. A significant percentage of those who used the drug reasoned
this way, and they, as were the diabetics who used it, were susceptible
to the significant side effects (i.e., liver failure and death) triggered by
usage.
C. How Drug Companies Manipulate You

The CDC reports that the percentage of adults using a prescription medicine
in the prior 30 days in the United States as 48.6%, whereas those using
three or more prescription drugs for designated ailments for the prior
30 days amounted to 21.7% based upon 2010 statistics.9 According to
the NIH statistics on prescription drug usage, 52 million people over the
age of 12 in the United States have used a prescription drug for other
9 See CDC.gov.
than its medical purpose in their lifetime.10 This suggests that prescription
drug usage in the United States is quite prevalent, and of course as we
age, we are more susceptible to disease, and hence more likely to fill a
prescription for a drug. It also suggests that many consumers are potentially
influenced by advertising to take drugs they do not need. For example,
consider the individual who believed that by just talking Rezulin, they had
punched a free ticket to indulging in unlimited ice-cream, chocolate cake
and other dessert delights simply because the drug “prevented” diabetes
onset. The use of DTC advertising has been shown and discussed to
have a significant and sometimes surprising impact on consumer behavior
(inclusive of motivating some women to ask to fill prescriptions for Viagra
and Cialis for themselves).11
Once the decision is made by the consumer to ask for a given drug, or
by the doctor to prescribe a need for a drug in the relevant product class,
one has to ask, what if anything perked up the consumer’s (or doctor’s)
interest in the drug in the first place. Brand name serves as an important
influence in consumer drug choice as does packaging, and even the color
and shape of the pill itself. Clearly, however, the consumer (or physician)
must be made aware of the drug in the first place before they could ask for
it, and DTC advertising is a key factor in driving this.
D. The Impact of Brand Name

Awareness through advertising of a given prescription drug is enhanced
if the brand name of the drug is effective, but what makes for an
impactful brand name? Kotler and Keller (2015), in their book on Marketing
Management contend that effective brand names must have the following
characteristics.12 That is, first they should be memorable, so that when the
potential consumer has a need for a product in a given area they can easily
recall the specific manufacturer’s brand.
10 NIH Website. This also includes off-label usage.

11 This comes from a personal discussion I had with my local pharmacist.
12 Kotler, Phillip and Kevin Lane Keller. Marketing Management, 15th edition. Upper Saddle
River, New Jersey: Pearson (2015), p. 309.
But what makes a brand name memorable? Well, the brand name should
be short, and distinctive. That is, does it stand out from the crowd in that
it is different from the other names in the product area? Importantly, will
most people be able to spell the name after hearing it spoken? Consider
Keytruda, a drug designed to treat advanced skin cancer. Using a “K” as
the first letter of a prescription drug may be problematic since consumers
may be confused and think that the brand name actually begins with a “C.” In
addition, for this particular brand, the issue as to whether the first syllable of
the brand is pronounced as “KEY” or “KAY” is unresolved. The transition
from hearing to writing is critical since oftentimes, word-of-mouth (WOM)
is important in driving sales, and if you hear something but cannot spell it,
the consumer will have a difficult time in tracking down the specific product
when they go on the internet to search for it, resulting in the pharmacist
filling a prescription for the wrong but similarly named drug (e.g., Celebrex
versus Celexa or for example Brilinta versus Brintellix). The latter is a
famous case as doctors confused a blood-thinning medication with an anti-
depressant. Likewise, will the consumer be able to pronounce the name
after seeing it written? Not being able to do this or creating a name that can
be pronounced differently by different individuals makes brand selection
difficult as the pharmacist may not know which brand you are talking about.
This of course negatively impacts brand recall, as the target market may
all think that they are referring to the same drug, but are not pronouncing
it similarly. Consider “Docusate” a prescription drug focused on pacing
water as it proceeds through the colon, is it pronounced DOSE-U-SATE or
DOCK-U-SATE?
A brand name must also be meaningful, in that it should convey some
essence of what need the product is filling for the consumer. For example,
the brand “Hamburger Helper” essentially communicates what the product
does, it adds spice and other ingredients (e.g., pasta) to chop meat to make
it tastier and to “Help” the flavoring. But what exactly does the prescription
drug “Flagyl” do? Does it flag down hitch hikers in your body? In a sense
it does . . . why of course, it kills some of the toughest bacteria known to
man (Clostridium difficile). I thought it could alternatively be confused as
a drug that helped people who had dizziness and nausea when they had to
look up a flag pole. . . Consider the generic drug, pyrazinamide. I couldn’t
find any brand name for this one, but would anyone conclude that this
drug can effectively treat tuberculosis? Well it can! I thought it helped treat
individuals who either were unexplainably inclined to light fires next to
the Great Pyramid in Egypt, or who had a need to embalm mummies at
the Cairo museum. Rodney Dangerfield actually named his dog “Egypt,”
supposedly because he left a pyramid in every room!
Meaningfulness suggests that the brand name should fit in some way
with the product one is selling. If the brand name would fit just as
well or better with another product category then the one it currently
is recommended for, then keep looking for a better name. Consider for
example “Claritin,” (Bayer) an allergy medication. Its name suggests the
term clear as in clear nasal passages. However, the first time you heard the
name you may not have been clear as to what the clear in Claritin meant, so
you needed some clarification, which probably happened the first time you
saw or used the product. In a sense then the competing product “Nasonex” is
an even better name for the drug since everyone can understand that the drug
deals with the nasal passage. Imagine if the manufacturer (Merck) were to
derive a brand name as a function of the generic name for the drug “Mo-met-
as-one.” This sounds like a clue for a baseball crossword puzzle. Finally,
to complete the key brands in the category consider Flonase, an allergy
medication from Glaxo-Smith Kline. Here, the brand name is indeed clear
in terms of suggesting what the drug does, however it can potentially evoke
a very unfavorable image in the mind of the consumer, that of a nose that
cannot stop flowing. When I think of Flonase, I imagine someone walking
around with a box of Kleenex, unsuccessfully trying to stop their nose from
excreting fluids on a 24/7 basis. Therefore, the values and imagery that the
name communicates to both the public and to the physician community is
critical. Now if one were to confuse Flonase with Flomax and in fact take
both, then that person would in my perception need both a box of Kleenex
and a box of diapers to survive. Consider “Allegra,” a Sanofi product for
allergies, while this brand name sounds like a real word, (i.e., Allegro —
meaning in musical terms brisk and lively movement), it may invoke in those
more musically inclined, the image of someone sneezing quickly in succes-
sion. Finally, consider the recent introduction of Xyzal for 24 hour allergy
relief. Now, the manufacturer of this drug is sensitive to how consumers
pronounce the name of their product. Their slogan (using an educated owl
who appears with a monocle) is. . . “Be wise-al use Xyzal.” This approach
kills two birds with one Xyzal (excuse the euphemism), that is it helps the
consumer to correctly pronounce the product’s name, and implies it is wise

to take the drug since you are told to do so by an educated owl who hopefully
is not sneezing, standing in front of a lot of books in an old mansion.
But why is the brand name for a given prescription drug so important a
factor to consider? The answer is that it is one element which will typically
remain constant in the drug’s lifetime as packaging, price and promotional
activity are all subject to change. As noted above, the brand name serves
to identify the product and plays a crucial role in building and maintaining
customer brand loyalty. Moreover, as the drug landscape becomes more
and more crowded with competitive entries, the need for a distinctive and
meaningful brand increases. For prescription drugs, brand loyalty is crucial
since if one is prescribed a drug which is effective, one is generally hesitant
to switch brands. This is because of side effects that might be introduced
if such a decision is made and for some drugs such as anti-depressants,
the period before a drug’s impact may be fully known can take up to 6
weeks because of the need to pass through the blood/brain barrier. Hence
switching brands in such a case can be life threatening.
It is important to also consider the need to design a brand name that not
only targets doctors but, with the prevalence of DTC advertising, catches
the imagination of the consumer. As I tried to illustrate above, a brand
name which has meaning ONLY to physicians is not likely to be clear to
the average consumer. Consider for example, the brand name “Fosamax,”
for a drug designed to strengthen bones in women. How many people out
there would know that “bone fossa” relates to a depression in a bone, and
make the connection that the drug is designed to fill in these depressions?
Clearly, over time as the drug name becomes familiar to the consumer, it
takes on meaning but this may only occur after it has spent a significant
amount of time in the market.
In a book titled “Brand Medicine: The Role of Branding in the
Pharmaceutical Industry,” Tom Blackett and Rebecca Robins noted that
in the 1980s and 90s there was a trend to name drugs with a brand name
that begins with the letter “Z” and “X.”13 These authors contend that
pharmaceutical brand names beginning with these letters, look unusual
13 See Tom Blackett and Rebecca Robins. Brand Medicine: The Role of Branding in the
Pharmaceutical Industry. New York: Palgrave MacMillan (2001), p. 160.
and convey a meaning of power and dynamism and are perceived as being
technical and scientific. But the problem with naming one’s brand in this
fashion, is that if this is becoming the norm for pharmaceutical brands,
then the advantage of such a novelty can quickly fade. Moreover, giving
true meaning to words that begin with the letter “Z” or “X” is difficult,
except possibly in China where everyone’s last name seems to begin with
these characters. The authors further argue that in the future, “we will
increasingly experience a shift away from the doctor’s language to the
patient’s language.” This suggests to me that drug names will trend to the
descriptive as opposed to the abstract in the years to come, and impactful
brand names should suggest some benefit of the product.
E. Actual Brand Names

Let’s first talk about some brand name prescription drugs presented in
Table 1, and see how the name itself might subtly induce purchase, possibly
even at the sub-liminal level. The interpretation for each name is meant to be
explanatory but also highlights some more serious as well as “lighter” asso-
ciations that consumers may make with the drug when seeing the name.14
TABLE 1: Interpretation of Prescription Brand Names as Purchase Motivators
Brand Name Purpose Interpretation
Adderall ADHD I can add numbers easily now, and I can add all
of them!
Alprazolam Anxiety reducer The Prisoner of Azkaban — Harry Potter swoops
you away from any anxiety that you have15
Alunbrig Lymphoma Puts the cause of the disease in the brig (jail)
Ambien Sleep aid Creates an “ambient” quiet environment; or “am”
“bien” (French) or I am going to feel good, if I
take this pill.
Anthim Inhalational anthrax cure Prevents anthrax poisoning through singing or
listening to the National anthem (works equally
well if you choose to stand or sit).
(Continued)
14 I admit that for you to understand some of these “associations” you might have to be
someone of my age.
15 I know that this is a generic name, but I like my description very much, so if you disagree
take a Xanex and chill-out.
TABLE 1: (Continued)
Antivert Anti-vertigo This drug name couldn’t be clearer!

Aricept Alzheimer’s Improves perception, especially if you are Greek.
Avandia Diabetes Advanced diabetes drug. I think ADvandia is a
better name.
Benicar Blood pressure Provides hypertension relief or the ability to listen
to a CD of Pat Benatar while driving down the
405 with your top down.
Cardura Blood pressure Provides durable (long lasting) cardiac relief for
hypertension.
Celebrex Arthritis Helps you celebrate as you rid yourself of painful
arthritis.
Cialis Erectile dysfunction Now you can SEE ALICE and make it count!
Concerta ADHD Helps you concentrate, especially if you have
aspirations of playing first violin in the New
York Philharmonic.
Depakote Controls convulsions If you don’t take it you may end up deprived of
medication in North Dakota, when you
convulse from the cold.
Entresto Heart failure “In god we entresto” — written on all Italian
currency; the last thing you read in Rome
before you die of a heart attack due to inflation.
Farydak Multiple myeloma Tinkerbell’s drug of choice!
Flomax Urinary retention Flow to the Max and make sure you on not in a
canoe without a hand-pump.
Focalin ADHD Helps a person “focus.”
Klonopin Anxiety reducer You “pin” down your anxiety by finding a gold
rush (Klondike) of calm.
Levitra Erectile dysfunction Levitation, and not a competitor of Houdini.
Lipitor Cholesterol reducer This drug is a lipid gladiator.
Lyrica Nerve pain Helps relieve nerve pain and may help you
become a ballerina or write an opera.
Nexium Acid reducer The Next-generation of stomach acid reducers
after Prilosec.
Norvasc Blood pressure Normalizes the vascular pressure.
Pristique Anti-depressant This drug is “mystical” and “pristine” in its
effects.
Procardia Blood pressure Promotes cardiac health, who could be against
this?
Risperdal Anti-psychotic Ignore unwanted whispers by putting them “on
the dole.”
(Continued)
TABLE 1: (Continued)
Tricor Triglyceride reducer This drug reduces your triglyceride count and
helps your coronary arteries.
Trulance Constipation Solves the problem by using a sharp and truly
pointed object to extract the offensive blockage
from the intestine.
Viagra Erectile dysfunction Viable Growth. Also gets you to flow like
Niagara.
Xermelo Carcinoid diarrhea Switches the pain from New York to Oklahoma
City
Zoloft Anti-depressant Takes your mood to “lofty” places from the
dumps.
F. Packaging
Brand image is created and enhanced by packaging, as the package
communicates information to the perspective consumer inclusive of the
brand name and other product attributes. An important component of
packaging is the color of the package and it is used prevalently in the world
of marketing to connote differentiation. Consider that Pepsi switched from
an emphasis on red to embracing the color blue, to differentiate itself from
Coke. In fact Coke most recently changed the packaging (and positioning)
of Coke Zero to Coke Zero Sugar in order to convey more clearly to
consumers that not only is the product absent of calories, but it is absent
of sugar also. Coke research showed that consumers of the old Coke Zero
may not have realized this fact. The use of more red in the Coke Zero Sugar
brand implies a closer linkage to Coca-Cola tradition and taste.
Did you ever think of the sweeteners that you put into your coffee each
day at Starbucks? Splenda is yellow, Sweet N’ Low is pink and of course
Equal is blue (while Starbucks is of course green). Even the rental car
agency you go to differentiates themselves by color, Hertz is yellow, Avis
is red, National is green and Alamo is blue! Obviously, color has meaning
to consumers in terms of the affect or feeling it elicits. One does not have
to go further than the famous studies reporting the suppression of angry,
antagonistic, and anxiety ridden behavior among prisoners resulting from
the painting of their cells a color later named “Drunk Tank Pink.” According
to Morton Walker in a book titled The Power of Color, “Even if a person

tries to be angry or aggressive in the presence of pink, he can’t. The heart
muscles can’t race fast enough. It is a tranquilizing color that saps your
energy, even the color-blind are tranquilized by pink rooms.”16 The impact
of color on behavior is not limited to pink, however, as previous research
has shown evidence that red is perceived to be an exciting color while blue
is perceived to be relaxing.17
These findings about color are interesting if one combines the drug’s
purpose with the color of its packaging, the brand name of the drug, and
possibly even the color of the tablet. Consider for example the drug Saphris.
This prescription medicine is approved for the acute treatment of manic or
mixed episodes associated with bipolar I disorder in adults, but it also acts
(and is used off-label) as a powerful sedative which relieves anxiety. Part
of the package design for this drug is a deep blue color and the first part
of the name is suggestive of this color. Consider the prefix “Saph,” it is a
derivative of the semi-precious gem known as a Sapphire which has almost
a hypnotic deep blue color. Hence the color of the package, the name and
the usage of the drug are all in alignment in this instance.
This is NOT a random effect. Consider sleep aid OTC medications
Unisom and Sominex. Both of these drugs use a “blue” theme in their
packaging, and for both brands the pill is a shade of blue. Of course both
drugs are taken to induce sleep, and the image of blue is consistent with the
drug’s purpose, that of relaxation. But what if you wanted a drug to help
you stay awake, possibly because you were studying for finals or going on
a secret military mission where you had to be alert for a long period of
time. The drug for you just might be NuVigil. Note that the word “vigil”
is defined as the time period that you keep awake which was reserved for
sleep, usually relating to the purpose of keeping watch or praying. NuVigil’s
packaging is closely linked to the color orange, showing what hopefully to
16 See Morton Walker. The Power of Color. New York: Avery Publishing Group (1991),
pp. 50–52.
17 Guilford, J.P. and P.C. Smith. “A system of color preferences.” American Journal of
Psychology 122(4) (1959): 389–402. See also Tom, G., T. Barnett, W. Lew, and J. Selmants.
“Cueing the consumer: The role of salient cues in consumer perception.” Journal of
Consumer Marketing 4(2) (1987): 23–27.
be an orange/yellow sun shape in motion. As orange is a combination of red

and yellow, it is perceived psychologically as an energetic color, mimicking
the exact purpose of the drug.
G. The Consumer’s Susceptibility to Drug Color and Packaging

A recent study in the Journal of Biotechnology (2010)18 reported that the
color, shape, taste and name of a tablet or pill can have an impact on how
patients feel about their medication. So, if one chooses an appropriate pill
consistent in color for example with what it is supposed to treat, then the
placebo effect gives the pill’s effectiveness a big boost! In fact, it might
even reduce perceived side effects! The effect of pill color on consumer
brand choice has even been popularized in the movies. Consider the words
spoken by the character Morpheus (as played by Laurence Fishburne) in
the movie titled “Matrix.”
You take the blue pill and the story ends. You wake in your bed and
believe whatever you want to believe. You take the red pill and you stay
in Wonderland and I show you how deep the rabbit-hole goes.
These words are entirely consistent with most research on consumers’

perceptual evaluation of prescription drugs. For example, deCraen, Roos,
DeVries and Kleijnen (1996) reported that perceived action of colorful pills
(which were actually placebos) showed that red, yellow and orange were
perceived as more impactful stimulants than pills which were blue and
green. The latter two colors were believed to be more effective than the
former colors as tranquilizers.19 Moreover, a recent study conducted in the
United States showed that capsules were perceived to be more impactful
than pills or caplets.20 It is interesting to note that Viagra was launched as
18 Srivastava, R.K. and More, A.T. “Some aesthetic considerations for the over-the-counter
(OTC) pharmaceutical products.” International Journal of Biotechnology 11(3/4) (2010):
267.
19 deCraen, J.M., Roos, Pieter J., deVries, A. Leonard, and Joseph Kleijnen. “Effect of color
of drugs: Systematic review of perceived effect of drugs and their effectiveness.” BMJ 313
(1996): 1624–1626.
20 See Buckalew, L.W., and Sherman Ross. “Medication property effects on expectations of
action.” Drug Development Research 23 (1991): 101–108.
a diamond shaped blue pill in 1997, a year after deCraen et al.’s (1996)
research was published. While the drug literally became an “overnight”
sensation, with sales totaling $1.74 billion in the first year alone, one could
wonder why the color blue was chosen? As noted, blue conveys a feeling of
calm, such as when one is looking over a calm bay or lake which seemingly
is opposite to the feeling that one has before one is motivated to take
Viagra in the first place. This fact was not missed by Bayer, the makers
of Levitra. Understanding full well the linkage between erectile function
and excitement,21 the company created a campaign and pill to figure out
“how to beat the blues,” a reference presumably to Viagra’s sky blue tablets.
Extensive marketing research concluded that consumers did not resonate
with the imagery of Viagra. Results showed that the blue color was in fact
too cool and icy and was equated with being sick. After extensive testing,
the company developed an orange pill, an extremely vibrant and energetic
color. The logo of the brand was an orange and purple flame, and the name
“Levitra” subtly suggested levitation which clearly describes the product’s
benefit of usage.22
Showing my age, I can recall the first time I realized that color was
important in pharmaceuticals. I was a child watching a commercial about
Ecotrin, a coated aspirin product, for which the actor Eddie Alpert (of
Green Acres fame), noted that a distinctive characteristic of the product
was that it was orange. The makers of Ecotrin were on to something, as
more recent research would show as noted, that a “warm colored” (red,
orange or yellow) package was perceived as containing a more potent drug
than a cool colored (blue or green) package. Moreover, dark packaging was
assessed as containing a more potent drug than a light one.23 Such effects
were also applicable to pill color as discussed above.
21 One does not have to be a genius to figure out that shortly after taking Viagra one’s heart
is going to beat a little faster, and this is not a direct function of the pill’s side effects.
22 So if we consider it a tie between the blue pill versus the orange pill, we should ask, what
color is Cialis? The answer is a bright yellow!
23 See Roullet, Bernard, and Olivier Droulers. “Pharmaceutical packaging color and drug
expectancy.” Advances in Consumer Research 32 (2005): 164–170. This effect is also present
for coffee, as darker coffee is typically perceived by consumers as being “richer” in flavor.
This was not favorable for consumers’ evaluation of Starbuck’s blond roast!
Prescription drugs were not always so colorful; indeed, up until the

middle of the 20th Century pills were typically both round and white, color
was almost non-existent. Today, gel caps can be tinted to any of 80,000
color combinations. The consumer’s perceptual sensitivity in particular to
package and pill color, attributing characteristics to pills of different colors,
has cynical implications. Such implications suggest that consumers can be
easily manipulated to request that a doctor prescribe a specific pill solely
based upon pill shape and package color. However, one can also look at
these findings with an eye toward Public Policy implications. That is, given
that compliance in taking medication strongly depends upon the patient’s
perception of the efficacy and effectiveness of that medication, if patients
are disinclined to take a pill they consider ineffective simply because of its
color or package design, then a change in aesthetics may induce a greater
compliance with taking the medication. This is a rather simple change, and
from the perspective of a drug company, one that would seemingly be quite
welcome. Moreover, for the elderly who sometimes get confused when they
take various medications, an addition of color may help them distinguish
between the many pills they may take.
Let’s now turn toward potentially deceptive selling tactics in our next
chapter.
Chapter 10
Selling Tactics That Have the Potential to Deceive
A. Introduction
I recently read a book titled: “In Vino Duplicitas,” by Peter Hellman which
detailed the escapades of a wine forger, yes a wine forger. This unscrupulous
individual by the name of Rudy Kurniawan, was described in the book as
having a virtuoso palate and as having the “best wine cellar in the world.”1
The problem was that he was actually purchasing cheaper more common
wines and re-bottling, corking, labeling and selling them for millions of
dollars as older rare wines from exclusive wineries such as Domaine Ponsot
Clos Saint-Denis when they actually came from Domain De CaCa.
Now you ask, how could this happen, given that among those who
could afford buying such wines, many customers must have been wine
connoisseurs with palates that could shame even Kurniawan? Surely,
couldn’t they recognize that the bottle was replicated even if their palate
was defective? Not necessarily, if they were impacted by the “confirmation
bias,” which we discussed earlier on in Chapter 3 of the book. That is,
simplistically, they tasted and saw what they expected to taste and see. But
a deeper answer to all of these questions can be found in a short story told
by Mr. Hellman at the beginning of his book about an experience he had
in Paris some years back. It turns out that I had a similar experience, in the
same city more recently, so I’ll relay my personal and similar experience
to the reader.
1 Goldberg, Howard G. “Acker smashes auction record.” Decanter (2006).
139
I was walking along a quiet street in Paris in the 13th arrondissement

when a young attractive woman speaking English with a slight French
accent approached me. In her hand she had three coins in cardboard holders
that appeared to include a 1937-d three-legged Buffalo Nickel, a rare Silver
Dollar and a 1909-s-VDB penny which were each marked at $1,500. She
asked me if I were American, and the city I lived in, and then said that
she had waited at least 30 minutes to find an American who could possibly
appreciate the coins she had apparently found in her apartment looking
through letters that her dad had sent her years ago. I stupidly told her that
I grew up in Manhattan, and upon hearing this information she explained
the she too had lived in Manhattan before her mother had divorced from
her dad and taken her to France at the young age of 12.
This apparent commonality, of coming from the same place at least for
a little while made me more sympathetic to the words she was about to say.
That and the fact that she had apparently waited for someone like me to
come along to “deliver the goods.” Commonalities based upon religion (in
the case of Mr. Hellman’s story), age, ethnic, or other types of identified
groups, which serve as the basis for fraud, are consistent with “Affinity
Fraud.” That is, the scammer exploits the special trust and friendships that
exist within groups of people who have something in common. “Relying
on group trust is often so powerful in overcoming people’s skepticism
that both the financially unsophisticated and the seemingly sophisticated
fall victim to these scams. These people probably fall victim to this type
of scan because they allow the trust they have for someone “like them”
to substitute for paying attention to the details of what they are getting
involved in.”2
So, this young attractive woman, aside from her good looks, had an
affinity scam cooking on the burner directed at me, and then things got
even worse for yours truly. She said that her father was a coin collector
and she knew that the coins she held in her hand were valuable, since he
sent them to her years ago. But now her dad was dying of cancer and
desperately in need of funds to get the one operation that could save his
2 Perri, Frank S., and Richard G. Brody. “Birds of the same feather: The dangers of affinity
fraud.” Journal of Forensic Studies in Accounting and Business 3(1) (2011): 33–46.
Selling Tactics That Have the Potential to Deceive 141
life. She offered me the coins, valued at $4,500 for a mere 500 Euros. I
told her non! Then she unexpectedly threw the coins at me and said “have
them” and began to cry, saying it was too late for her father any way.
Of course I couldn’t let her give me these coins for free so I gave her
a 100 Euro note and she immediately thanked me and dashed away into
the night. I actually fell for the old “reciprocity bias,” trick, in that one
feels compelled to give something to someone if they are given something
for free.3
So what happened to my coins you ask? A few weeks later when I went
to the coin shop to see what the coins were worth, dear reader, I found out
that they were not worth any more than the paper I am writing these words
on and the “silver,” dollar was fake and came from China. But there is more
to come. . . .
Imagine that you were “lucky” enough (as I was) to have received the
following letter from a world famous real estate mogul and current United
States President addressed directly to me, bearing the Mogul’s personal
logo at the top of the letter and the words “From the Office of Donald
Trump.” The letter stated:
Success in real estate begins with great training and proven strategies.
Without education you don’t stand a chance.
I know how to make money in real estate. I’ve been doing it for a long
time with a lot of success. My family has been a leader in real estate since
my father Fred Trump started building residential homes in New York
City 75 years ago. My father was my mentor and he taught me a lot. Now
I want to teach you how to make money in real estate. To be my apprentice
you need to Think BIG and really want to succeed. More than anything
you need to take action.
Do You have What It Takes to Be My Next Apprentice?

I only work with people who are committed to succeed. I founded Trump
University back in 2005 to teach go-getters how to succeed in real estate.
My team at Trump University is filled with real estate experts . . .proven
3 See Zajonc and Burnstein. “Structural balance, reciprocity and positivity as source of bias.”
Journal of Personality 33(4) (1965): 570–583.
winners. We’re the best of the best and we know what works. If you think
you have what it takes to be my next apprentice, prove it to me.
We’ve trained thousands of real estate investors over the years and we
know you will be most successful when you work with a partner. . .
If you’re serious about making money and safeguarding your future,
learn to invest in real estate. Trump University will teach you how. We’ll
give you the best training and the confidence to succeed. If you think
you’ve got what it takes to be my next Apprentice, come prove it to me
and my team. See you at the top!
While this letter taken alone may have potentially deceptive elements
within it, when considered as part of a complete promotional campaign,
involving personal selling and up-selling tactics designed in part, to get
“students” to purchase the “Gold Elite” program for $34,995 (Note — a
savings of $5.00 from the price of $35,000), New York’s Attorney General
Eric Schneiderman believed that there was enough evidence to bring a
lawsuit accusing the mogul of fraud.4
B. False Designation of Goods

So what makes a sales approach deceptive? One factor relates to a “False
Description of Goods.”5 So for example, a salesperson tells a perspective
client that the furniture that they are planning on buying is solid mahogany
and that it will last a lifetime, when in reality it is a mahogany veneer with
a plywood base. In reality, the only lifetime this type of furniture can last
through is that of a termite.
In the case above, Mr. Trump offered programs and courses emanating
from Trump University, a “University” whose advertising maintains was
created and founded Mr. Trump himself way back in 2005.6
According to an article published in the New York Daily News in 2013,
when asked in deposition about the “University” which bears his name,
4 This case was later settled along with two other California based cases when Mr. Trump
became President.
5 Hester, Stephen L. “Deceptive Sales practices and form contracts — does the consumer
have a private remedy.” Duke LJ (1968): 831.
6 As a point of reference Dartmouth was founded in 1769 and Harvard in 1636 just a short
time before Trump University if you count in 100’s of years!
Mr. Trump replied that attending Trump University was “no different than
going to Harvard.” “They say go to Harvard, great school, blah, blah, blah,
and I think this is — except I think we have a higher approval rating than
Harvard if you want to know the truth.” “I went to the Wharton School
of Finance,” “I know a lot about education.” The comparison to an Ivy
league school does not end there as the symbol of Trump University, a
“Heraldic lion” is similar to those used at Cambridge University, an English
university which served as one of the models for the creation of the Ivy
league.7 This provided prospective consumers with a cue suggestive that
plunking down their money at Trump University was similar to plunking
it down at Harvard, Yale, Princeton, Dartmouth or any other top-rated
university.8
So while it is not deceptive to use a “Heraldic lion” as the iconic
image of Trump University, the use of the term “University” to describe
the home base of the offered program leads one to think of a research-
based institution with a tenure process, which was not characteristic of this
business.9 Consider the ruling of the Supreme Court of the State of
New York who argued that to be called a “University” in the State of
New York, one must have the proper licensure and accreditation, which
Trump University lacked. So, while one element of a sales campaign
may not be deceptive on its face (e.g., the lion) combining it with
another term (i.e., “University”) can give the relevant target consumer
the potentially false perception that he/her is applying to a university
that rivals an Ivy League institution in terms of the quality of education
offered.
7 Note that the acceptance rate of incoming freshman at Harvard according to the latest
statistics is 5.9% while at Dartmouth it is 10.1%. The acceptance rate at Trump University
is arguably significantly greater.
8 As my son goes to Dartmouth, anyone sadly familiar with their yearly tuition of
approximately $70,000 each year for four (count em) FOUR years would realize that
$34,995, the amount Mr. Trump asked for to attend his Gold Elite program, pales in
comparison. In this respect Mr. Trump’s price was a relative bargain!
9 In the interest of full disclosure, I served as an expert witness in a California based class
action brought against Trump University that settled when Mr. Trump became President of
the United States.
C. Fear Sales Scheme and Fear Sales Tactics — Creating

Immediate Need for Purchase
Consider the following example, a salesperson calls on a family who live in
a condominium complex. The salesperson falsely tells them that they must
purchase a certain attachment for the sink in their apartment or they will
fail to comply with the CC&R’s (Convents, Conditions and Restrictions)
of the condominium association and will be fined monthly. If this is not the
case, then such a sales approach is deceptive because in order to gain a sale,
the potential target consumer is led to believe a falsehood which relies on
a factor or attribute that is salient or “material” in their decision whether or
not to purchase the product.
Those in sales are famous for motivating purchase by increasing the
salience of the need to purchase quickly. This is designed to encourage
System I processing (covered in Chapter 1 of this text) where decisions are
made quickly, instinctively and emotionally but not necessarily optimally.
Yet such tactics cannot be considered deceptive on their face (unless a
bald-faced lie as in the above example is involved in motivating purchase)
since they simply establish the need to purchase quickly. Deception only
potentially comes into play in part if because of such tactics, the potential
buyer misses key factors that if observed when not under time pressure,
would have made them change their mind about purchasing or not.10
D. Phony Gift Schemes and Upselling

Consider the following example, a target population is identified in a
community who are to receive a free gift of two tickets to an investment
seminar that is designed to increase one’s financial knowledge and make
the attendee investment savvy. However in reality, the “free” tickets to the
seminar are simply an approach to get the individuals in the target market
to show up at the same place (typically a luxury hotel) at the same time so
that they can be sold a more extensive series of lectures with the provider.
Now, on the surface one can always say no! to the offer of further
engagement with the company for a fee, yet the first “FREE” session is
10 Consumers can also be deceived by factual information presented in a deceptive or

confusing way.
always presented as part of a bigger whole, such that the decision not to
continue, even at a financial cost, is positioned as one’s decision to abandon
the need for completion (See the Zeigarnik Effect as discussed in Chapter 5
of this book and the need for closure). This is extremely hard to do and
gets harder once one is induced to purchase the next step in the process
that typically increases in price as one becomes more and more involved
in the offerings. Moreover, once you have invested time (and ultimately
money) in an approach, the “Sunk Cost Fallacy,” as discussed in Chapter 3
as a form of cognitive bias, ultimately keeps you on the same path, even as
losses potentially accumulate.
E. Bait and Switch

Many years ago I can remember begging my mother to let me buy a color TV
so that I could see a new series titled “Batman” which debuted in January
of 1966 on ABC, or more specifically on your favorite “Bat Channel.” I had
seen an advertisement in the Daily News from a now defunct electronics
firm called “Friendly Frost” showing a 13 color television for $59, but
only available at select stores and in limited quantities at each store. The
sale was to begin at 9 a.m. on a Monday (December 20th 1965) and there
was a Friendly Frost offering the item only eight blocks from my apartment
in Washington Heights. I tore out the advertisement from the newspaper,
showed it to my mother and convinced her that we needed the television
(the first color television in our home), since now she could see the Andy
Williams Christmas Special in color and gaze into Andy’s green eyes.
So, at 5 a.m. I got up, brushed my teeth quickly, bundled up, and ran
all the way to 181st expecting to see a large crowd in front of the Friendly
Frost store. I got there at 5:20 a.m. and to my surprise, I was the only one
there when I arrived. People came by in dribs and drabs and as the doors
opened exactly at 9 a.m., I was the first customer in the store. I immediately
blurted out to the salesperson who asked me what I wanted: “I’ll take the
13 GE color television please for $59.” To my SHOCK, the salesperson
told me that they had just SOLD OUT of the item? Being 12 years of age,
I didn’t want to cause a scene, but it did occur to me that it was impossible
to be sold out of an item on the first day of the sale when the FIRST
customer enters the store and asks for the special deal! Before I could
even say anything, the salesman said: “But you are in luck, we have an
unadvertised special here, a 19 Sylvania color television for only $109.00,
it’s our last one and I am offering it JUST to you.”11 He continued, “just
think the price is less than TWICE the GE, but the viewing area in terms
of square inches is more than twice the GE!” Well, I did the math and
indeed, he had a point, the latter had 169 square inches of viewing space,
while the more expensive television had 361 square inches. I purchased
the 19 television after calling my friend Jeff to come to the store with an
extra $50.00 and an additional pair of arms to help me carry it eight blocks
back home.12
This was my first and only victimization to the old “Bait and Switch”
scam, where an unsuspecting consumer is encouraged to purchase a
substitute good, in an attempt to make consumers satisfied with the available
stock offered, as an alternative to a disappointment or inconvenience of
acquiring no goods (or bait) at all. This “switch” provides a seemingly
partial recovery of sunk costs: https://en.wikipedia.org/wiki/Sunk_costs
expended trying to obtain the bait. The game is played by the seller by
denying the consumer access to or exposure to the original product or
service advertised and desired, but instead demonstrates a more expensive
product or a similar product with a higher margin. This “scam” is illegal in
the United States, yet it is quite prevalent not surprisingly.
Finally, because I felt so bad that I was scammed, I reasoned that it
was a good thing that I purchased the larger television because that allowed
me to see New York Rangers games more clearly and for my mother to
gaze at some bigger green eyes. This rationalization of the choice of a
less than optimum alternative resolves the cognitive dissonance which is
defined as the mental discomfort or psychological stress experienced by
a person who is faced with a difficult decision choice. I’m sure you the
reader has experienced such dissonance when considering the purchase of
a high-ticket item. Every time I am in this situation, I end up thinking
11 The math does work out. . . 19 × 19 equals 361 and 13 × 13 equals 169. Therefore the
19 screen is indeed twice as big as the 13 screen.
12 My father threatened to bring the television back and “put the vendor out of business” but
my mother argued that we needed a bigger television set anyway, and that an “eagle would
need contact lenses to clearly view the 13 GE set.” I must admit, this made me feel a little
better for having been scammed, and maybe that was her plan all along.
about the unchosen alternative and then over time my mind serves to
discount that alternative by finding fault in it, or alternatively elevating the
option I chose.13
F. Sale Pricing
If a retailer or salesperson claims that they are selling an item at a supposed
reduced price, despite never having sold it at the “full” retail price, this is
a deceptive selling practice. For example, let’s say that Macy’s claims that
they are selling Calvin Klein suits for $199.00 down from the usual regular
price of $399.00. If Macy’s however NEVER sold such a Calvin Klein suit
for $399.00 previously, but instead wanted their consumers to think they
are getting a sale price at $199.00 then the store is guilty of pricing its
product in a deceptive way and may be subject to a lawsuit. To combat this,
consumers should develop a working knowledge of the pricing history of
an item they are interested in purchasing so that they know what price is
a “deal” and what price is not, especially a high priced item. If it helps,
keeping a diary of price history may help especially for the items you are
particularly interested in acquiring.
A recent example of this tactic was recently illustrated by the company
who makes “My Pillow,” I’m sure many of you have seen the incessant
advertising by a man with a mustache who tells you his name (Mike Lindell)
and asks you to try his pillow for a great night’s sleep. All of the offers
typically involve a “buy one, get one free,” which is known in the Marketing
field as a BOGO. However, if you ONLY sell your product as a BOGO,
effectively a case can be made that the true price of one of the item’s is
actually really half of the price as advertised for the BOGO, since you
never actually receive one unit for the advertised price, but two! This issue
caught the attention of the Better Business Bureau (BBB) of Minnesota and
North Dakota in 2017, resulting in their concluding the following:
“Among other issues, BBB has attempted to persuade MyPillow to

discontinue their ‘buy one get one free’ (BOGO)/other discount offers
without success,” said Dana Badgerow, president and CEO of BBB of
13 See Leon Festinger. “Cognitive dissonance.” Scientific American (1962): 93–106.

Minnesota and North Dakota. “Continuous BOGO offers, which can then
be construed as an item’s regular, everyday price, violate not only BBB’s
Code of Advertising — which all BBB Accredited Businesses agree to
abide by — but also other state and national organizations’ rules.”14
While the BBB is not saying that “My Pillow is not a great product,”
they are saying that the anchor price for the BOGO, which is considered
by the consumer to be the price for one pillow while receiving the
benefit of two, serves as an incorrect anchor for the true price of the
item. This serves to artificially inflate the consumer’s perception regarding
the value of the deal that they are getting from the company and
arguably makes them more likely to purchase the item than they normally
would be.
Similarly, if a company wants to highlight their cheaper price over the
competition, they must be certain that the competition is selling both the
same item (e.g., by model number) and that they have sold enough of it
at the higher price to make the company’s price a legitimate “deal.” For
example, if the competitor is offering a specific model of HD television for
an inflated price, but hasn’t actually sold any televisions at that price, then
the “cheaper” price isn’t really cheaper at all, and could be considered a
deceptive pricing tactic.
Finally, as a consumer one must be cognizant of “free” with purchase
offers. For example, offering a free tote bag with your purchase of $100
of Lancôme make-up is not, by itself, a violation of the law. But if you
raise the price of the make-up in order to compensate for the gift of the
free tote bag, then you are not really offering a free tote bag and the action
is questionable. Additionally, if you normally provide a service, like free
shipping, with purchase, but you eliminate that free service because you
are including the “free” tote bag, you are not really offering the tote bag
for free and are again are engaging in problematic behavior. Likewise, an
increase in price of the make-up to compensate for the “free” shipping can
also be deemed to be deceptive, false and misleading.
14 Please see the following Internet address for more on this story. Available at: https://
www.bbb.org/minnesota/news-events/news-releases/2017/01/mypillow-bbb-accreditation-
revoked/.
G. Price Lining
This deceptive approach may seem at first glance to be simply a pricing
tactic, but while it does indeed focus on price, it can be utilized in a personal
selling context to motivate purchase of a good you may not originally have
intended to purchase. Price lining is defined as a process utilized by retailers
of separating goods and services into different cost categories in order to
create various quality levels in the mind of the consumer. In order for price
lining to be effective, the seller must put sufficient price gaps between
categories to signal prospective buyers of quality differentials between the
lines, yet also make sure that there is some overlap between the categories.
Consider the following example: a prospective customer enters a large
department store with the intention of buying a relatively low priced suit
for around $159.00. The salesman shows the customer a suit for around
that price and tells him/her that a price of $159.00 is the top of the line for
inexpensive suits made in China, whereas for the same price “you can
purchase a European made suit from our European collection.”15 This
accomplishes two objectives for the seller, it establishes that even when
paying $159.00 the customer is still getting an “inexpensive suit,” and
secondly it suggests that for the same price the customer can select from
a rack of better quality European suits. However, the European suits may
start at $159.00 and go up to a price of $359.00. From the perspective of the
seller, this higher price range that he/she has now switched you into enables
the vendor to have you at least consider a suit costing $359.00, for after all
who wants to purchase (or for that matter be seen) in the cheapest suit in a
given price range? In addition, the creation of the price line from $159.00 to
$359.00 puts higher and lower priced suits into one neat container under one
15 There has been many research studies in marketing which show that “country-of-origin”
is an important and salient indicator or cue for judging quality. See for example, Martin,
Ingrid M., and Sevgin Eroglu. “Measuring a multi-dimensional construct: country image.”
Journal of Business Research 28(3) (1993): 191–210; and Nagashima, Akira. “A comparison
of Japanese and US attitudes toward foreign products.” Journal of Marketing 34(1) (1970):
68–74. If you do not want to read these articles, then consider the following: it is generally
perceived in the United States that if you want great quality beer, you go to Germany and
if you want great quality wine you go to France. Yet buying French beer and German wine
seems like something only the village idiot would do!
common category (e.g., European suits), which supposedly the consumer

should think he/she now has access to. Price-lining is a deft sleight-of-hand
that moves the consumer into the consideration of higher prices ranges, by
almost shaming you into doing so.
H. Protecting Yourself from Various Deceptive Selling Tactics

As has been stated many times in this book, the consumer can avoid being
manipulated by simply coming into the situation prepared, and by having
a keen understanding of the product they wish to buy and the price they
wish to pay in advance. Let’s take an example of bidding on eBay. Suppose
that you are interested in the purchase of a signed copy of Harper Lee’s
classic novel “To Kill A Mockingbird” in anticipation that its price will rise
given the recent release of the sequel “Go Tell A Watchman” and her recent
passing. Prior to bidding on the item, you make a promise to yourself that
you will not make a bid in excess of $1,000. However, 30 seconds before
the end of the auction, someone else makes a bid that exceeds yours and
you think about overbidding that person to win the auction.
First ask yourself a question . . . is your goal to win the item of interest
at any price or is it to win at a price at or below your reserve price (i.e., the
price for which you truly value the item)? If the answer is the former, you
are susceptible to deceptive and influential sales tactics since the ultimate
goal of all of these tactics is to get you to purchase something you initially
didn’t plan on purchasing and/or to make you pay more than you wanted
for an item that you planned to buy. Plan ahead and stick to your guns! and
don’t make yourself a victim.
Chapter 11
Deceptive Advertising and Promotional Techniques
A. Introduction
When I was a young boy, I used to anxiously await the third Friday of
the month because “Uncle” Eddy down at Eddy’s candy store on 172nd
street and Broadway got in the new issues of Spiderman, the X-Men, the
Fantastic Four and the Avengers. All of these of course were Marvel Comic
books, and if I was smart enough then, I would have saved all of them,
put them into an air tight vault and sold them 50 years later to insure that
I had a well-funded retirement. Well as it happens, I did indeed save them,
but alas when I moved out of my messy room, and into a new apartment
with my wife, my mother thinking that I had left a box of garbage behind
threw them all out. All that was left was the memories, and here is one
of them.
Take a good look at the advertisement in Figure 1, I know that I did
maybe hundreds of times when I was a kid because never fail, it appeared
in many of the Marvel and DC comics that I purchased.
Note that the advertisement promises at first glance, the ability to
have X-ray vision. However, in smaller font size it actually uses the word
“illusory,” and in even smaller font size that an eagle would need contact
lenses to read, it says “A Hilarious Laughingly Funny Illusion.” However,
may I also bring to your attention, the notion that the person illustrated on
the right of the advertisement who looks like he is looking through a coke
bottle to see and is possibly guilty of supreme geekiness, is actually looking
through someone’s hand. At first, I didn’t believe it, even at second, third,
fourth and fifth look, I didn’t believe it but then after multiple exposures
151
FIGURE 1: X-ray Vision
I decided to squint to the best of my ability and read the text. It said: “See
through fingers-through skin- see yolk of egg (sic)- see lead of pencil(sic).”
Many many amazing astounding illusionary “X-ray” views yours to see
ALWAYS — when YOU wear Slimline “X-ray Specs.”
Now I did not need to see “yolk of egg” or “lead of pencil,” but as
I moved slowly toward puberty, I did have a growing need to see “shape of
girl” under the dress and I thought that short of being arrested on indecency
charges, these glasses would get me where I wanted to go. So not exactly
knowing what illusory meant, I saved my excess allowance for four weeks
and sent away for the glasses, all the while instilling in my mother’s mind
a cover story that I was straining to see the blackboard and therefore
needed glasses. Well, two weeks later, around the time that the glasses
were supposed to arrive in the mail, you can bet that every day at 3 p.m.
when school let out, I was the one to retrieve the mail so that my parents
would not notice that the shipment I received came from “X-ray Department
14” from the Rembrandt Company of Newark, New Jersey on 285 Market
Street. Now it never occurred to me that real X-ray glasses would certainly
cost more than $1 (even in 1963), nor that the technology was not yet
advanced enough to put X-ray’s in lenses. Nor did I even care about the
Deceptive Advertising and Promotional Techniques 153
risk of radiation I was likely to receive, similar to what the “Radium Girls,”
were exposed to when they painted the dial of watches. What I wanted to
do was expose the girls I was looking at!
Immediately upon receipt, I went into my room, closed the door and put
the glasses on. Instead of being able to look through a wall, I walked into a
wall. It was at this point that I realized, X-ray glasses and all, that I had been
a victim of deceptive and false advertising, at an innocent and young age.
B. The Lanham Act in False Advertising

The Lanham Act is the primary Federal Statute of trademark law in the
United States governing and prohibiting trademark dilution, trademark
infringement and false advertising: As written, the act establishes the
following as law, with part (b) below relevant to the issue of false
advertising:
Any person who, on or in connection with any goods or services, or any

container for goods, uses in commerce any word, term, name, symbol, or
device, or any combination thereof, or any false designation of origin, false
or misleading description of fact, or false or misleading representation of
fact, which:
(a) is likely to cause confusion, or to cause mistake, or to deceive as to
the affiliation, connection, or association of such person with another
person, or as to the origin, sponsorship, or approval of his or her goods,
services, or commercial activities by another person, or
(b) in commercial advertising or promotion, misrepresents the nature,
characteristics, qualities, or geographic origin of his or her or another
person’s goods, services, or commercial activities, shall be liable in
a civil action by any person who believes that he or she is or is likely
to be damaged by such act.1
However, to establish in federal court that an advertisement is indeed

false, a plaintiff must prove five characteristics about the advertisement in
question: (1) a false or misleading statement of fact has been made about
the advertiser’s own or another person’s goods, services or commercial
1 See U.S. code, Title 15, Chapter 22, Subchapter III, § 1125.
activities; (2) the statement either deceives or has the potential to deceive
a substantial portion of the target market; (3) the deception is also likely
to affect the purchasing decisions of its target market, which addresses its
“materiality;” (4) the advertising involves goods and services in interstate
commerce and (5) the deception has either resulted in or is likely to result
in injury to the plaintiff.
C. Comparative Claims
So, what is most interesting in the discussion above is that a statement
made in advertising does not have to be false to be impactful and therefore
prosecuted, but rather can be true but lead to misleading inferences made
and relied upon by the consumer. So, this notion most closely relates to
a movie made by a former California Governor by the name of Arnold
Schwarzenegger titled “True Lies.” At this point, the reader might be
confused and ask, how can something that is true mislead anyone? The
answer is. . . easily! Imagine that you were watching television and an
advertisement came on conveying to you information about a head-to-head
comparison between two headache pain relievers (pun intended). So as not
to disparage anyone, let’s call the pain relievers “Burst” and “Jackhammer.”
Consider the following data in Table 1 relating to consumers’ preference
for one brand versus another in a head-to-head headache test. Imagine that
100 consumers who had frequent headaches were recruited into a clinical
study and were told to randomly use one brand to relieve the first headache
they experienced and when the next headache came upon them, to then
TABLE 1: Comparative Results of “Head-to-Head” Comparison between Burst

and Jackhammer
Result % Who Agree
Burst is much better than Jackhammer 14

Burst is better than Jackhammer 19
There is no difference between Burst and Jackhammer 34
Jackhammer is better than Burst 22
Jackhammer is much better than Burst 11
Total 100%
use the other brand. After thinking about the pain reducing effect of each
of the brands they were then asked to categorize their experience in the
framework of the effectiveness of one brand versus the other according to
the five categories listed in Table 1 above.2
Now, here you are in your living room listening to the advertisement for
Burst as the spokesperson happily says: “In a clinical study conducted in
an independent laboratory, subjects (note he did not say consumers, so as to
make the results seem more scientific),3 were found to experience that Burst
was significantly more effective in treating pain that causes headaches than
is Jackhammer. In fact, over two-thirds (67%) of those surveyed, a clear
two-thirds margin, said that Burst was as good as or better than Jackhammer
in relieving the pain that causes headaches.” Now, if you the reader “do the
math” you will see that this 2/3 claim is indeed supported by the data and in
fact is TRUE. In fact, if you don’t do the math or if the numbers underlying
what is said by the spokesperson are not presented you would most likely
conclude that Burst is a far superior pain reliever for headache pain than
is Jackhammer. But you would be dead wrong! Arnold. . ., you have been
influenced by “True Lies.” In fact the very same data shows that exactly 67%
of those surveyed believe that Jackhammer is as good as or better than Burst
in relieving the pain that causes headaches. In fact, if you “do the math” you
will see that Jackhammer and Burst were considered to be EQUIVALENT
in effectiveness in relieving headache pain. This is because the data shows
that 33% felt that Burst did better than Jackhammer (add the data in the
first two rows of Table 1 together) and that 33% felt that Jackhammer did
better than Burst (add the data in rows 4 and 5 of Table 1 together).
So where does the deception come in and how does it magically appear?
Quite simply, if a given manufacturer claims row three for its own (e.g., the
row that states “There is no difference between Burst and Jackhammer”),
one achieves the majority result or 2/3 finding. The lesson here is not to rely
upon what is said, but rather if the purchase decision is important enough,
ask for access to the data underlying the claim. Now let’s move from this
2 Note that the data as collected for each of the categories is presented in column 2 of the
table.
3 This is my hypothetical example, and I can make it as deceiving as I want it to be, you are
free of course, to embellish it.
hypothetical example illustrating that facts can be misleading to a real world

example of data manipulation as reported by Bruce Buchanan and Doron
Goldman in an article published in the Harvard Business Review almost
30 years ago.4 Doron was an undergraduate student of mine many years
ago at NYU, who eventually studied for his Doctorate at the Stern School,
combining his business knowledge with a Juris Doctorate.
The authors report on a court case involving R.J. Reynolds Tobacco
Company suing Loews Theaters. At first glance this seems like a strange
lawsuit involving a cigarette company suing a hotel/heater chain, but a
closer inspection shows that Loews was the maker of Triumph cigarettes
through its subsidiary Lorillard which was spun off from the company
in 2007. The suit involved R.J. Reynold’s Winston Lights brand that was
the focus of comparative advertising from Loews’ Triumph. Evidently to
support a claim against Winston Lights, Triumph cigarettes conducted a
consumer survey that asked four major questions relating to “preference,”
“better taste,” “amount of taste” and “satisfying quality.” On the first two of
these questions, Triumph scored a majority preference over Winston Lights,
but on the attributes of “amount of taste” and “satisfying quality” it did not.
Triumph, however, based its advertising claim on the results of the first two
questions and largely ignored the others, hence the basis for the lawsuit.
According to Buchanan and Goldman: “The court found that Triumph
had “failed to establish a basis” on which to disregard the results of the last
two questions, since these also asked about the relative quality of the two
brands. It also held that “failure to disclose a material aspect of the results,
relating to taste, under the circumstances is misleading.” Once again, only
partly revealing the data and presenting only part of the truth ignores the rest
of the results leading the consumer to make false inferences regarding the
basis for his/her judgment. Buchanan and Goldman term this tactic “Cherry
Picking.”
D. False Advertising Claims Involving Ingredients

Recently, NBC Business News announced that if you drank Red Bull
Energy drink in the past 12 years, you may be entitled to a payment of
4 Please see Buchanan and Goldman. Harvard Business Review. 89 (1989): 38–53.
$10.00 because a class action lawsuit5 was settled regarding Red Bull’s
famous slogan and advertising, that “Red Bull Gives You Wings.” In the
lawsuit directed against the company, the plaintiff did not sue Red Bull
because he remained “wingless” and therefore could not fly, after he drank
the beverage, but rather the suit involved “false advertising” in that (as
contended) the drink did not boost one’s energy beyond the amount that a
regular cup of coffee would. It was maintained that the advertising led the
reader to make such a conclusion. Relevant language from the lawsuit read
as follows:
Even though there is a lack of genuine scientific support for a claim that
Red Bull branded energy drinks provide any more benefit to a consumer
than a cup of coffee, the Red Bull defendants persistently and pervasively
market their product as a superior source of “energy” worthy of a premium
price over a cup of coffee or other sources of caffeine. Such deceptive
conduct and practices mean that [Red Bull’s] advertising and marketing
is not just “puffery,” but is instead deceptive and fraudulent and is therefore
actionable.
In settling the lawsuit, Red Bull agreed to discontinue the use of the
slogan but made it clear that their position remains that their advertising was
not deceptive stating: “Red Bull maintains that its marketing and advertising
have always been truthful and accurate, and denies any and all wrongdoing
or liability.”
Notice that the plaintiffs’ made the argument that the Red Bull
advertising, “is not just puffery, but is instead deceptive and fraudulent.” The
distinction made that the advertising is characterized as “not just puffery”
is critical to the case because “puffery” is not actionable in a court of
law and is representative simply of exaggeration without any basis in fact.
Puffery is defined as: “A promotional statement or claim that expresses
subjective rather than objective views which no ‘reasonable person’ would
take literally.”6 So for example, when I was newly married, a pizza store
5 This was a class action lawsuit brought forward under the plaintiff’s name of Benjamin
Careathers.
6 See Newcal Industries, Inc. v. IKON Office Solutions, 513 F.3d 1038, 1053 (9th Cir. 2008).
near my home in Sheepshead Bay Brooklyn, had the following on their take
out boxes of pizza: “you have tried the rest, now try the best.” This is a fine
example of puffery since “the best” is a subjective term, and it is not clear
on what dimension or set of attributes the product is indeed the best nor
what are the geographical boundaries …Brooklyn, New York State or the
United States! Believe me there is a BIG difference between Brooklyn and
the rest of the United States! Moreover, even if I believed that the pizza was
horrible, it would be unreasonable for a “reasonable” consumer to claim
that they relied on this claim and expected to be served the “best” pizza in
the world. The term “reasonable consumer” and what such a person would
infer, is key in court actions since this is typically the standard by which
the interpretation of advertising claims is judged against.
Finally, I have seen a lot of advertising recently for a new supplement
called Prevagen. The product claims that it “Improves Memory” as well
as leading to a healthy brain function, sharper mind and clearer thinking. I
am not saying that this company is guilty of false advertising, but the claim
is on its face so strange, that it may not be believed. Evidently, the secret
ingredient that underlies the effectiveness of the product is apoaequorin, an
element supposedly only found in jellyfish and is part of the mechanism
or chemical reaction that allows them to glow. Now while it may seem
interesting to the consumer that the supplement contains an element that is
unique to jellyfish, the key issue that remains unanswered is why would
such an element be linked to memory? Here revealing the underlying
data, possibly in an advertisement would be important for credibility,
and I have not yet seen such an advertisement. Frankly, I have also not
seen many jellyfish who can remember where their last meal came from.
Indeed, when one thinks of animals who are famous for their thinking
ability or even their memory, the jellyfish is typically not on the top
one’s list.
Now if Prevagen made the claim that they contained an element that
only elephants have, I would be more likely to believe them since elephants
are famous for their memory, so until it is shown that a jellyfish named Fred
wins the South Florida spelling bee, I’m holding off on buying Prevagen,
even if it is shown that if I take it my brain would glow in the dark!
E. A New Wrinkle on Deceptive Advertising Claims

“If Botox were lethal, half of Beverly Hills would be dead and the other
half would be suicidal,” said Dr. Ava T. Shamban, a cosmetic dermatologist
in Santa Monica.
In my role as an expert witness, I have been deposed over 50 times and
have testified at trial (both Federal and State court) 10 times. Twice over my
career, I have been involved as an expert in marketing in civil actions against
Allergan, a large pharmaceutical firm based in Troy-Hills New Jersey who
is probably most famous for their marketing and development of Botox
and Botox Cosmetic. In the first case I was hired by Klein Becker, the
makers of Strivectin, an anti-aging cream, who were sued by Allergan over
their slogan “Better than Botox?” Obviously, such a slogan did not sit well
with Allergan, since there was apparently evidence that Klein-Becker’s
positioning of Strivectin as going head-to-head against Botox was taking
sales away from this powerful brand.
However, Strivectin countered by arguing that the slogan “Better than
Botox?” was defensible for three reasons. First, it was claimed that it
was not an expressly made claim but rather it simply asks a question
of the consumer. . . that is, is our product superior to Botox? According
to Klein-Becker, the ad did not necessarily suggest an answer. Secondly,
the term “Better than Botox?” was claimed to be simply puffery. That is,
better in what respect? Finally, Klein-Becker could take the position that
their product was better than Botox because it was not injected into the
body as a potentially poisonous substance, but rather applied as a topical
cream and hence potentially less dangerous. As you can imagine, Allergan
took great exception to this position, maintaining that if you topically
apply something to the face to “relax” wrinkles and it has minimal or no
effect, can you argue with a straight face (pun intended) that it is better
than another product, especially one to be known to be as effective as
Botox?
Now as an aside, in this case the attorneys asked me to do a survey,
asking Botox Cosmetic consumers what they thought was the key ingredient
of Botox Cosmetic, purportedly to show that Botox Cosmetic consumers
were not well educated about the product they were buying. In reality,
Botox and Botox Cosmetic are drugs made from a neurotoxin produced by
the bacterium Clostridium botulinum called botulinum toxin. It is one of
the most powerful neurotoxins in the world and is used to medically treat
certain muscular conditions and when applied to the face, can cosmetically
remove wrinkles by temporarily paralyzing muscles. According to Nigam
and Nigam (2010),7 doses of Botox are measured in mouse units, yes mouse
units (which is the amount of toxin that kills 50% of a group of 18–20 g
female Swiss–Webster mice).8
Now, one would expect that the #1 answer that Botox Cosmetic
consumers would give to the question, “What is Botox made of” would
be some form of neuro-poison or substance that blocks nerve endings from
receiving signals from the brain. However, the most frequently given answer
that I received was surprisingly, “elephant urine.”9 Where such a response
came from, I have no idea, but I suspect it reflects a rumor that circulated
on the internet about the product.10
The second case that I appeared in as an expert witness, against Allergan
featured Dr. Arnold Klein as a defendant. Dr. Klein, was known as a Beverly
Hills dermatologist and a close acquaintance of both Elizabeth Taylor and
Michael Jackson. He was also an opponent of Allegan who manufactured
Botox. Presumably, Dr. Klein was partly responsible for Allegan getting
a “black box” warning for their product Botox in 2009 because of a rare
but potentially life-threatening complication involving the drug when the
effects of the toxin spread far beyond the injection site.
7 Nigram, P.K. and Anjana Nigam. “Botulinum toxin.” Indian Journal of Dermatology 55(1)
(2010): 8–14.
8 Why female Swiss–Webster mice are required for this test, instead of say mice from a
fieldhouse in New Jersey is beyond the technical expertise or comprehension of this author.
However, the Swiss–Webster mice presumably have a greater preference for Swiss cheeses
than those located in New Jersey, and may be good at writing dictionaries.
9 I’m aware of giving someone a compliment by saying that “you have porcelain skin,”
however at least in this country, the statement, that “you have elephant skin,” is surely not
going to be taken very kindly, or get you a second date.
10 Clearly injecting elephant urine in anyone’s face would probably have the ability to change
one’s appearance and for that matter would definitely end a lot of your friendships and
increase your penchant for eating peanuts. However, if anyone looked at an elephant’s
wrinkled skin, one would naturally have to wonder how such a rumor began.
The New York Times described the case involving Dr. Klein in the
following way in their feature article dated October 3rd 2004 titled: “Botox
Lawsuit is Raising Eyebrows:”
He is a Beverly Hills doctor known for pioneer work in cosmetic
Dermatology and for a star-studded patient list, where “Michael” is for
Jackson and “Elizabeth” is for Taylor. She (the plaintiff) is an A-list
Hollywood wife, active in the right philanthropies and Democratic party
politics, and married to a famous movie producer.
But after a doctor-patient relationship of more than 20 years, Arnold W.
Klein and Irena Medavoy are facing off in a medical malpractice trial in
Los Angeles Superior Court that has tongues wagging as much about the
players as about what they are fighting over: Botox
. . .there is more than passing concern about the issues Mrs. Medavoy’s
lawsuit has raised, including “off label” uses of approved drugs, and the
sometimes cozy relationship between doctors and drug makers.
The lawsuit revolved around the fact that Dr. Klein administered a dose
of Botox to Mrs. Medavoy to treat her for an off-label usage of the drug,
that of migraine headaches without warning her of the risks or disclosing
that he was a paid consultant for Allergan.
Botox, similar to any other drug, is approved by the Food and
Drug Administration (FDA) only for specific uses for which the drug is
considered to be “safe and effective,” and any use of the drug outside of
such approved uses is termed “off- label.” Yet, such “off-label” usages
of a drug are quite common among medical practitioners. In the case of
Botox Cosmetic, the drug was initially only approved for “glabellar lines,”
the vertical lines between the eyebrows. Yet it was applied for a migraine
headache, resulting in apparently for Mrs. Medavoy, the worst headache
she ever experienced in her life up to that point (“like somebody put a
three-sizes-too-small helmet on you.”)11
In this case, I was engaged to conduct a survey of Botox Cosmetic
patients, to determine the inferences they made, particularly with respect
to the uses of Botox Cosmetic, when shown a series of Botox Cosmetic
11 See Navarro, Mireya. “Botox lawsuit is raising eyebrows.” New York Times, Fashion and
Style, October 3rd 2004.
DTC advertisements. Specifically, in September of 2002, the FDA sent

Allergan a letter regarding several Direct-to-Consumer (DTC) promotional
and broadcast pieces which advertised the product as follows:
It seems like everybody is talking about Botox Cosmetic, the highly

effective, non-surgical procedure that can dramatically, reduce your
toughest wrinkle within seven days.
According to the FDA:

This statement is prominently presented at the beginning of the patient
brochure, and is misleading because it does not emphasize that this is
a temporary procedure. In addition, the term “toughest wrinkle,” does
not adequately specify the approved indication for use and misleadingly
suggests that Botox Cosmetic is for use in all tough wrinkles. Please
immediately cease distribution of these, and similarly worded materials
and revise these statements to clearly emphasize the temporary duration
of this product and to appropriately identify the approved indication for
use, e.g., “those tough lines between your eyebrows.”
So, my survey exposed users and potential users of Botox Cosmetic

to advertisements from Allergan which made the “toughest” wrinkle claim
and simply asked these respondents what they believed the advertisement
was referring to when it mentioned one’s “toughest wrinkle.” Please see
Figure 2 for the potential wrinkle candidates. The results of the survey were
fascinating, that is, I received five main answers each essentially receiving
approximately 20% of the vote, characteristic of a rectangular distribution.
That is, relatively equal mention between the Glabellar line (also known
as frown lines), the horizontal forehead lines, crows’ feet, nasolabial folds
and marionette lines (my personal favorite). This survey therefore showed,
that when an advertised claim is made that one’s product can “reduce your
toughest wrinkle” this brings to mind at a relatively equal rate, five different
wrinkles on the face for those who purchase Botox Cosmetic. Therefore,
such an advertisement, by mentioning the term “toughest wrinkle,” and
letting women rely upon their interpretation of the term, is effectively
advertising off-label applications of the product without mentioning each
specific wrinkle by name.
I would agree there are certain cases where it is too difficult to tell
where one’s “toughest wrinkle” is located on one’s face, as the illustration
FIGURE 2: One’s Toughest Wrinkle
in Figure 3 shows on the next page. However, hopefully one gets some form
of treatment before it gets to this point!
F. Deceptive Brand Names

Way back in 1919, the United States Supreme Court decided that the use of
a federally registered trademark (i.e., brand), could be a deceptive practice
in violation of a consumer protection statute. In a landmark case, the United
States Department of Agriculture challenged the use of the trademark
“Creamo” to identify margarine that contained no cream because it leads
to the deceptive belief on behalf of consumers “that cream is a substantial
ingredient of the oleomargarine.” The company contended that because the
designation “Creamo” had been sanctioned as an appropriate trademark
by the Patent Office (then part of the Interior Department) it could not
FIGURE 3: Tough Wrinkles
be deceptive. However, The Supreme Court disagreed. Essentially, the

company (Blanton Manufacturing) got “creamed.”12
Brand names are important to both buyers and sellers. For buyers, the
brand name and its reputation serves as a promise of consistent, though
not necessarily high, quality when a repeat purchase is being considered.
It serves as a “chunking,” attribute it that it conveys or implies a lot of
information to the consumer at once in the form of a brand name. For
sellers, the brand name or trademark identifies and distinguishes their goods
from those of other sellers and enables the construct of “brand loyalty,” to
develop. So, the naming of a brand is critical especially if it conveys or
implies false or misleading information to the target market.
Consider the following: Isn’t it obvious that if you smoke a “Light”
cigarette as opposed to the “regular” version of the brand, you would
12 See Brougham v. Blanton Manufacturing Co., 249 U.S. 495 (1919).

inhale less tar and nicotine, and hence the name “Light” makes literal
sense? According to numerous state-based class action lawsuits against
cigarette manufacturers, the obvious is not necessarily the truth. This is
because the filters in low-tar/low-nicotine cigarettes often include vent holes
which, when open, allow air to enter and dilute the smoke. However, many
smokers cover these holes with their lips and fingers. In contrast, when
tested by a machine, typically the holes are unobstructed and artificially
low measurements of tar and nicotine are obtained. So, therefore, for many
smokers, although the package may indicate that a “light” cigarette is lower
in tar and nicotine than a regular version of the same brand, and rightly so,
the actual amount that a smoker ingests of these chemicals could be the
same as if they were smoking a regular cigarette.
But let’s say you are trying to escape this litigious world, so you and
your young child sit down in front of the television set to relax and watch
an educational program on the “History Channel.” Imagine that the first
program that is shown is something called “Chasing Tail,” followed by Pawn
Stars, “American Pickers” and “Sex in the Ancient World — Pompeii.” Do
you see a trend forming here? By the names of these shows, you begin to
believe that your living room has been transformed into a sleazy Las Vegas
lounge, indeed what happened to those historical, educational and exciting
programs or movies such as “Lawrence of Arabia,” “Patton” and “How the
West Was Won?.” By showing these programs within the broader brand
name of the “History Channel,” the viewer attempts to link the content
of such programs to history, essentially doing the job of the programmers
for them. However, this attempt to “frame” the programs can only go so
far, because as the content deviates further and further from history, the
target audience experiences a greater propensity to abandon the channel
entirely, as it becomes more and more difficult to accept the programming
as consistent with one’s expectations as to what a “History” channel should
reasonably present. Essentially, the image of the “History Channel” can
become unclear and diluted.13
13 Until proven wrong, it is my belief that Sex in the Ancient World was probably similar to
sex in the Modern World, although arguably in Pompeii when Vesuvius exploded, I would
admit that sex was probably “hotter,” than it is now.
G. Negative Price Options and More

So you give up on watching the History Channel and decide to get in touch
with your Aunt Florence who you haven’t spoken to for 3 years. Knowing
that you have lost most, if not all of her recent contact information, you go
to “People Search” to do a quick check on her address. There you are given
two options to get a “People Search Report,” where you can get important
information about her, like telephone number, date of birth and current
address for the special price of $0.95, and as indicated, a whopping 75%
discount from the regular price. All you have to do to begin the process is
press the high chroma orange button which states “Add to Cart.” However,
just below this button and in very fine light gray print which blends into
the background of the webpage, that a hawk would need bifocals to read,
is the text that states “Special Price With Intelius Offer Learn More.” The
other option directly below the first is to simply pay the “Regular Price” of
$3.95 by pressing the light green button that also says “Add to Cart.”
One’s tendency is to click the top button above as opposed to the
bottom below for three specific reasons that are all linked to automatic
or (System I) processing as discussed previously in Chapter 1 of this book.
First, the price of the top option is lower than the one on the bottom of
the page and consumers are typically attracted to lower price “deals” and
better value for the money.14 Second, consumers, and humans in general for
that matter, tend to gravitate to the button that is higher on the page which
happens to be closer to the description of the product as offered because
of primacy considerations linked to the “serial positioning” and “order”
effect.15 Finally, high-chroma colors are colors that have a distinctive and
intensive bright hue, and are more attention getting than a lower-chroma
green.16 This is why the Ferrari is typically produced in a fire engine red
14 See Blattberg, Robert C., and Kenneth J. Wisniewski. “Price-induced patterns of

competition.” Marketing Science 8(4) (1989): 291–309.
15 Kardes, F.R. and Herr, P.M. “Order effects in consumer judgment, choice, and memory:
The role of initial processing goals.” NA — Advances in Consumer Research 17 (1990):
541–546.
16 Gorn, Gerald J., Amitava Chattopadhyay, Tracey Yi, and Darren W. Dahl. “Effects of color
as an executional cue in advertising: They’re in the shade.” Management Science 43(10)
(1997): 1387–1400.
color and images of Las Vegas are typically shown in bright engaging
colors. It is actually beneficial for a company, or a vacation city, to utilize
high-chroma colors in their advertising or product composition if such a
product is linked with or known for excitement.17
At this point, the reader may not think twice about a seller’s use of
the above marketing tactics, and may not even find them to be deceptive.
However, as usual there is more to the story that we will not cover here
relating to what happens as you proceed through the purchase process.
Indeed, if you click on the heavily discounted button you may have actually
purchased another offering in addition to what you believe that you have
purchased, and not necessarily from the same company whose website you
visited initially. Such a strategy is called “Negative-option pricing.” Such
an approach makes purchase the default action for consumers, effectively
shifting the burden of effort in the sales process from the seller to the
consumer. In traditional markets, it is the burden of the seller to convince the
buyer of the value of the goods or services offered for sale. However, under
negative-option pricing, the default assumption is the opposite, making it
the responsibility of the consumer to take action to stop payment if he or she
feels the good or service is not worthwhile. In some cases, the consumer
may not even be aware that he/she has actually made a purchase. This
purchase process was highlighted in a class action lawsuit brought against
Intelius in the state of Washington, for which I appeared on behalf of the
class as their marketing expert. The lawsuit was effectively resolved with
Intelius denying the allegations, but agreeing to offer refunds to consumers
through a $10.5 million dollar class action lawsuit settlement.18
H. Two-Sided Advertising
Most advertising that the consumer is exposed to is “one-sided” in nature
in that the seller typically says only positive things about their product.
17 Aside from Hue and Chroma, color varies as a function of “value.” Value is defined as
the lightness or darkness of the color. When something is given a pastel value, this is linked
to relaxation for the consumer. Again see, Gorn, Chattopadhyay, Yi, and Dahl (1997).
18 See Keithly v. Intelius, Inc., et al., Case No. 9-cv-1485RSL, U.S. District Court, Western
District of Washington, Seattle.
This is because there is a general fear in the advertising world today that if
one were to say something negative about one’s product not one consumer
would ever buy it, this is called, “two-sided,” advertising. But every story
has two sides, and it turns out that if only positive things are said about one’s
product, the more the advertiser exaggerates product claims, the more likely
the consumer is apt to believe that the product cannot do what is claimed.
When this happens, the consumer has experienced a “contrast” effect in
that when compared to what the advertising says about the product, product
performance is rated even more unfavorably than if nothing was said about
the product at all.19 Contrast occurs quite often when some product, service
or event is touted as the greatest experience that the consumer is ever going
to have, or for example as a life changing product or event. When one
compares the product experience with what one expects (typically derived
from what is claimed in its promotion), the experience traditionally can
only pale in comparison, and contrast occurs.
As an example of this contrast effect, when I was a teenager and first
went to Naples, Italy I was told the famous saying: “See Naples and Die,”
meaning that you have seen the most beautiful thing on earth, so now you
can die and feel fulfilled. With such high expectations, I ran to see Naples
rushing through Florence, Rome, Cinque Terra and Sorrento like they didn’t
exist. When I got there and saw laundry hanging off of high-rise buildings,
I experienced the biggest contrast effect of my then young life leading me
to exclaim, “I died when I saw Naples.” In reality, there are few products
or experiences which memorably meet or exceed expectations. The first
iPhone could be one example of such a product, and maybe your new fire
engine red Maserati.
Now before I discuss an approach which when cleverly utilized can
make consumers evaluate the product or service experience as consistent
or better than their expectations for a wider range of exaggeration, I need
to prove to you that you have well-formed and anchored expectations for
a wide range of phenomena. To prove this, we need to go back in time
19 Contrast is part of the Theory of Assimilation — Contrast proposed by Muzafer Sherif

and Carl I. Hovland. Social Judgment: Assimilation and Contrast Effects in Communication
and Attitude Change. New Haven, CT: Yale University Press (1961).
almost 30 years ago to late 1990 when I used to take my now older son
to the local park for a ride in the swing when he was about one year old.
Every time I did this, I encountered other parents, mostly moms who would
typically make two comments. The first was, “I wish that I had a husband
who would take the baby to the park every day,” and secondly, “how old
is your child”? As I am a marketing strategist, I knew that most of the
mothers had already developed an answer to this second question based
upon how big my boy was as well as his level of verbal skills. That is, they
had developed clear expectations regarding how a child looks and acts at a
certain age, calibrated to within weeks. So to annoy these moms, I would
always say that my child was three months younger than he was. When I
gave that response, each and every mom, no exception, would open their
mouth,. . . gasp, and say in complete surprise, “he’s SO BIG for that age,
and he TALKS SO FLUENTLY. . .” In response, I would tell them that he
told me he was thinking of bypassing kindergarten to go directly to Harvard.
The kicker was, watching the moms looking angrily at their own kids and
wondering why he/she couldn’t say anything and why he/she was so short.
I often feared that they would give their kid a wallop when they got home.
Now back to two-sided advertising. While this technique may be
valuable for the advertiser, since they can get the consumer to swallow
the sales spiel “hook, line and sinker” even when exaggeration is great,
it is dangerous for consumers, since the end result is that they may
have a tendency to buy into the advertisers’ claims under the condition
when the claims are not actually true. Such an approach is called “two-
sided” advertising and was the focus of my dissertation research at New
York University in the early 80s.20 Advertising that is “two-sided” states
favorable characteristics of a product or service on specific important
attributes but then says something negative about the product on an
unimportant attribute.21 It turns out that saying something negative on
20 See Kamins, M.A. and Assael, H. “Two-sided versus one-sided appeals: A cognitive
perspective on argumentation, source derogation, and the effect of disconfirming trial on
belief change.” Journal of Marketing Research 24(1) (1987): 29–39. This represented the
published form of my dissertation research.
21 See Etgar, Michael, and Stephen A. Goodwin. “One-sided versus two-sided comparative
message appeals for new brand introductions.” Journal of Consumer Research 8(4) (1982):
460–465.
FIGURE 4: Example of Two-Sided Advertising
a relatively unimportant attribute makes the consumer more likely to

believe what is favorably said about the product. That is, the consumer’s
evaluation of the product tends to run consistent with one’s expectations
as expectations rise to increasingly higher levels. Consider Volkswagen’s
famous advertisements from the late 60s and early 70s as shown in Figures
4 and 5. Both advertisements “admit” that the car is ugly, but counter the
claim by refuting it. This is done by framing the car’s looks in the context
of durability (i.e., lasts longer) and quality (that the looks are only what is
seen on the surface).
Such ads are called two-sided refutational ads because they introduce
a negative claim and then immediately refute the claim in light of another
(favorable) claim. The approach is impactful because the attack (that the car
is admittedly ugly) is presented in weakened form not unlike a disease for
which the germs are introduced into the body in weakened state when you
get an inoculation. In fact, “Inoculation Theory” originally introduced by
McGuire (1961), serves as the theoretical foundation for the effectiveness
FIGURE 5: A Two-Sided Refutational Advertisement
of such an appeal.22 In the Volkswagen case, the consumer is told that the
car may be perceived by others (who are not in the know) to be ugly, but
they will be calling it ugly for a long time because it’s going to last a very
long time. Now what’s more important, durability or looks? To Volkswagen
22 McGuire, William J. “The effectiveness of supportive and refutational defenses in

immunizing and restoring beliefs against persuasion.” Sociometry 24(2) (1961): 184–197.
owners who think the car is cute, (and I am one of them who currently owns
four Volkswagens), you are preaching to the choir.
Now, if one were to use a two-sided appeal and not use refutation,
(known as a two-sided non-refutational appeal) the appeal may be viewed
as more credible (since the advertiser is expected to derogate or defend any
weakness about the product that is made evident), but it does not counter the
negative because no attempt is made to refute it.23 The study I conducted to
examine two-sided non-refutational appeals involved a supermarket basket
of goods where 100 items were selected randomly each week and then
the prices at four different local Southern California supermarkets were
totaled and revealed to customers. The company that sponsored the research
(Ralph’s), a famous supermarket in Southern California, was very pleased
with the results for the first week of the study as their total came out as the
lowest among the competition. However, in the weeks that followed this
was not always the case. One of the upper-level managers at the company
relayed to me that during the weeks in which Ralph’s was NOT the lowest
price, they received more letters congratulating them for being an honest
company. The problem was however that during these weeks their sales
dropped as consumers chose lower price over honesty and shopped at the
competition! The solution for this problem, was for Ralph’s to emphasize
other qualities that they had that other local supermarkets didn’t (such as
farm fresh vegetables and better specials and coupons), but once they did
that, this introduced a form of refutation regarding the fact that they did not
have the lowest price all of the time.
Two-sided appeals are rare, but when you encounter one in your role as
a consumer be wary that your feelings of warmth toward the advertiser may
come at a cost. That is, while the advertiser may seem truthful because they
are revealing a negative product attribute, think to yourself, what favorable
attributes about the product do they want me to accept on their face?
23 Kamins, Michael A., and Lawrence J. Marks. “An examination into the effectiveness of
two-sided comparative price appeals.” Journal of the Academy of Marketing Science 16(2)
(1988): 64–71.
I. Consumer Defense to False and Deceptive Advertising

In a lot of the examples that I discussed above, the advertiser made an
express statement or implied something about their product or service which
the consumer assumed was true and accepted at face value. For example,
Allergan’s claim that they could “dramatically reduce your ‘toughest’
wrinkle within seven days” or Strivectin’s tagline “Better than Botox?”
at first glance allows the System I “thinking fast” consumer, respectively,
to relate the initial claim to apply directly to what THEY believe is
their toughest wrinkle, and alternatively for the second claim, to interpret
a question as if it were a definitive statement. This of course can be
problematic, to say the least.
The lesson learned here is that consumers should think more deeply
about what is actually being said in the advertisement before running
off and making conclusions. Speaking of running off, in yet another
example of advertising deception, Skechers shoes made a rather Sketchy
claim when it unlawfully marketed its line of rocker-bottom shoe products
including Shape-ups, Tone-ups, and the Skechers Resistance Runner as
providing certain health and medical benefits that were not adequately
proven by scientific evidence. Skechers claimed that its toning shoes caused
consumers to lose weight, burn calories, improve circulation, fight cellulite,
and firm, tone or strengthen thigh, buttock and back muscles and that its
products also reduced stress and improved sleep. However, these claims
were not substantiated by credible evidence. The company was sued by
the New York State Attorney General and resolved the lawsuit with a $40
million dollar nationwide settlement.24
But in this case, one look at their celebrity spokesperson as she passed
you on the street would have served as evidence for me to determine that
the claims made by Skechers about their product was false. Indeed, Kim
Kardashian is not very believable as a cellulite fighter, and when it comes
to the ability to strengthen buttock and back muscles, let’s say that for this
24 Please see https://www.ftc.gov/news-events/press-releases/2012/05/skechers-will-pay-

40-million-settle-ftc-charges-it-deceived.
product there was no spokesperson bigger that the company could have
hired than Kim!
Now let’s turn in the next chapter to advertising which has never been
accused of stating the truth and there is no reason to think that this changed
in the prior election year or for that matter ever will! Indeed, we now focus
on Political advertising — buckle your seatbelts …
Chapter 12
Political Advertising and Deception
A. Introduction
You mean to tell me that politicians may not be necessarily honest in their
advertising campaign for office? Well, I’m sure that I’m not telling you
anything that you don’t already know! But here are some Presidential
campaign advertising slogans that you may not know and which can be
judged for their truthfulness after the fact. Let’s play a game, I present
the slogans and you guess the President (the answers will be presented in
the footnote below, and please do not read the next paragraph before you
have finished this exercise). Consider the following: (a) “Happy Days are
Here Again;” (b) “He Kept Us Out Of War!” (c) “Vote Yourself A Farm;”
(d) A Chicken in Every Pot, and a Car In Every Garage;” (e) “Not Just
Peanuts;” and (f) “A Stronger America.”1
Now why were these slogans particularly questionable in their veracity?
Well the first slogan was introduced by Roosevelt in the 1932 election, and
only seven short years later, the world was at war again, now of course
we cannot blame FDR, indeed, who knew the degree to which Hitler
endangered the world back in 1932? Wilson used the slogan “He Kept
Us Out of War” in 1916, but then 2 years later we entered the war and
suffered significant casualties. Lincoln’s promise of a farm, I’m sure, was
1 The answers are respectively: Franklin Roosevelt, Woodrow Wilson, Abraham Lincoln,
Herbert Hoover, Jimmy Carter and finally John F. Kerry. Ok, Ok, I know that Kerry was
never elected President (to date), but I thought the slogan was interesting in light of his role
as key negotiator for the nuclear deal with Iran!
175
not realized by many as the U.S. was engaged in the civil war that began in
1860, when this campaign slogan was in use. Even if you got a farm, if it was
anywhere near Gettysburg, then then farm was probably full of dead horses
and sheep and lots of cannonballs! Hoover’s promise in 1928 of chickens
and cars seemed to dissolve before everyone’s eyes as the U.S. entered the
“Great Depression” in 1929. Finally, the slogan “Not Just Peanuts” was
used by Jimmy Carter in the 1976 election. Although it does not convey
much about Mr. Carter, aside from the fact that he should not be identified
as simply a peanut farmer, my son’s response to the slogan included the
following innovative addition to it “Not Just peanuts . . . just nuts.”
Of course I could have included the slogan “Make America Great
Again,” but if I did, then half of the population would probably refuse
to read this book given the division in the country after President Trump’s
election. On the day that Sarah Palin endorsed Donald Trump for President,
the New York Daily News headline blared out “I’m With Stupid, as Figure 1
illustrates.”2
Now, Michael Ramirez, a former Pulitzer prize winning cartoonist for
the Conservative Republican leaning newspaper Investor’s Business Daily,
used the same saying for his cartoon showing Hillary with the arrow on her
Trademark “H” pointing upward to her instead of sideways in Figure 2. It’s
not hard to see by the image, whether or not Mr. Ramirez was favorable to
Hillary achieving the highest office in the land.
The latter use of the saying “I’m With Stupid” may have been triggered
by Ms. Clinton’s own campaign slogan: “I’m With Her.” which replaced
her prior use of “Hillary For America” which she used at the beginning
of her campaign in 2015. At the close of her campaign, she used varying
campaign slogans. Consider: “Fighting For Us,” which was countered by
Mr. Trump who stated that it is unclear who the “Us” in “Fighting for Us”
is, implying that it was indeed Hillary and Bill. Mr. Trump maintained
that if Ms. Clinton really cared about the electorate, she would have used
the slogan “Fighting For You.” She also utilized, “Stronger Together,” and
“Breaking Down Barriers.” However, when you are not consistent in the
2 The New York Daily News has been adamant about its dislike for Mr. Trump before and
since the election.
Political Advertising and Deception 177
FIGURE 1: Anti-Trump Headline from Daily News
message that you send, the message that you wish your target market to
understand about you gets diluted.
On the Republican side, Mr. Trump’s use of the slogan “Make America
Great Again,” can be critiqued because it assumes something that may not
FIGURE 2: Follow the Arrow UP with permission from Michael Ramirez and Creators
Syndicate, Inc.
be true in the first place . . . that is, did America really lose it’s greatness?
However on the plus side, it is clearly a call to action, whereas “Stronger
Together” is not. For example, standing together on the top of Mt. Everest
may not help you in a big snowstorm when the oxygen supplies are ebbing
away, and the night has begun to fall along with the ambient temperature.
Whether or not you take a liking to the slogan, Trump’s marketing advantage
over Hillary was that he kept his slogan constant throughout the campaign,
whereas Hillary had many reincarnations inclusive of the channeling of
Eleanor Roosevelt with her announcement for the Presidency on Roosevelt
Island.3
My vote for the BEST campaign slogan of the 2016 Presidential
campaign was “Feel the Bern” since the enthusiasm and youthful energy
3 It is indeed difficult to separate your feelings for the candidate from your feelings for the
campaign slogan. Sometimes the slogan fits the candidate, for example, how could Hillary
ever have a hat that said “Make America Great Again,” she would look “goofy” in it and
according to Mr. Trump, that moniker is reserved for Elizabeth Warren.
of “Uncle” Bernie Sanders could not be denied and his campaign slogan
said all of that in three short words. My vote for the worst campaign
slogan of 2016 was Jeb! clearly if anyone deserved an exclamation point of
excitement at the end of his name, Jeb seemed ill fitted for this designation.4
He and Ben Carson both seemed a bit on the drowsy side. Finally, a
campaign slogan should represent what the candidate stands for in a few
short words. Therefore, “Make America Great Again,” does well and “Jeb!,”
again falls on his face literally and figuratively.
In today’s world, political campaigns, especially those of national
stature (like that of a Presidential campaign) seem to require more than
just political advertising, slogans, hand shaking, appearances and political
rallies. It seems as if every candidate has to write a book to create exposure
and build their credibility. More importantly, in a society enamored with
reality television and hard-core news morphing quickly into the realm of
entertainment, the notion that traditional political advertising can maintain
the impact that it has had in past elections is up for debate. This is especially
true of the 2016 election where now President Trump utilized his fame as a
television reality show favorite to his advantage in his run for the Presidency.
To this effect, I recall Anderson Cooper saying early on in the campaign that
Trump has incredulously achieved significant exposure despite not spend-
ing a lot on advertising. He didn’t have to! If Mr. Cooper just stood back and
thought about Mr. Trump’s rise in the polls, he would have realized that his
channel (CNN) and those at Fox and MSNBC were responsible for giving
Mr. Trump hours and hours of air time early on in the campaign that other
candidates were not privileged to simply because of the entertainment value
of Mr. Trump and the money linked to increasing audience size. The “news”
stations created the situation, and for CNN and MSNBC, complaining about
the result (as they seemingly do every day now) is a bit too late.
We live in a world where “entertainment” seems to rule rather than
substance, and those who talk before thinking actually may have an
advantage over those who think before talking. So, is it any surprise that a
given candidate who appeared for long periods of time almost every night
4 Mr. Trump caught onto this characteristic early quickly naming him “low energy,” so that
even when Jeb got excited, Mr. Trump could get away with congratulating him on his burst
of enthusiasm, often telling him to see if he could keep it up for a longer period of time.
early on in the campaign on both more liberal MSNBC and CNN, and more
conservative Fox, won the election?
Back in Chapter 5 of this book, I discussed the process through
which advertising becomes impactful, that of the “Hierarchy of Effects”
first proposed by Lavidge and Steiner (1961).5 These authors proposed
that advertising works by moving the prospective purchaser through
the following stages: unawareness => awareness => knowledge =>
liking => preference => conviction=> purchase. This can be alternatively
viewed as moving the prospective consumer from cognition to affect or
feeling and finally to action or purchase. So think about it, since Mr. Trump
dominated all other candidates in awareness, not only because of his fame
as a reality television personality, achieved mostly through the television
show “The Apprentice,”6 but also because of all of the media attention given
to him, he had a head start in the hierarchy relative to the competition in
creating preference, and this in part explains the Trump phenomenon and
the Trump Presidency.
The importance of exposure in advertising and promotion as a prelude
to shaping attitudes and preferences is well illustrated through the work
of Frank Luntz. Mr. Luntz is an American political consultant and public
opinion wizard who uses survey/marketing research to determine the best
way to communicate through the use of words, the message wished to
be conveyed. The title of his first book: “Words That Work: It’s Not
What You Say, It’s What People Hear,”7 essentially reveals the key to his
success. Working for Republican causes, he advocated the use of vocabulary
designed to produce a desired effect in terms of consumer belief including
the re-positioning of estate taxes as a “death tax,” to cast a deathly pale on
the public’s view of estate taxes and the more relaxing framing of tax relief
instead of tax cuts.
5 Lavidge, Robert J. and Gary A. Steiner. “A model for predictive measurements of

advertising effectiveness.” Journal of Marketing 25(4) (1961): 59–62.
6 This show established Mr. Trump as a “take no prisoner” hard driving and shrewd,
calculating businessman. It served to clearly define his image and what he stands for, for good
or for bad, an advantage he has over other candidates who many believe are untrustworthy
and hiding their true beliefs and nature since they are viewed as part of the political hierarchy.
7 New York: Hyperion (2007).
Amazingly, Seth Stephens Davidowitz (2017),8 reports on a

study conducted by two economists in the highly respected journal
Econometrica.9 Using the 2005 Congressional Record as a source, these
researchers identified those phrases used most often by respectively
Republicans and Democrats (i.e., partisan phrases). They then turned their
attention to digitized newspapers and counted how frequently a set of
1,000 partisan phrases appeared in these newspapers in order to gauge the
respective paper’s political slant (i.e., which measures the frequency with
which newspapers use language that would tend to sway readers to the right
or to the left on political issues). They found that using this methodology,
the Daily Oklahoman from Oklahoma City was the most Conservative
with the Washington Times not far behind and the Tri-Valley Herald from
Pleasanton was the most liberal with the San Francisco Chronicle not far
behind. While this may not be shocking, if someone came to visit their
Uncle Fred say in Oklahoma City, unbeknownst to him, the paper they
were reading would use language designed to shape their opinion in a
certain way, and if they took the writing to heart and read the paper often
enough, they could be manipulated.
Political advertising and the increasing politicizing of our media has
not been welcomed with open arms by society at large, and the former
has often been accused of “selling candidates like soap.” Such advertising
has also been perceived to create candidate images which bear no relation
to reality and for the destruction of the political system by emphasizing
candidate personalities over substantive issues.10
More recently, political advertisers have been accused of using “neg-
ative” approaches to advertising much more frequently than in the past.
Possibly to counter what is a disturbing trend, the latest euphemism is to
call a political “attack” ad a “contrast” advertisement. Now a “contrasting”
political advertisement is not necessarily a false ad, it is traditionally defined
8 Davidowitz, Seth-David. EveryBody Lies: Big Data New Data and What the Internet Can
Tell Us About Who We Really Are. New York: Harper Collins (2017).
9 Gentzkow, Mathew and Jesse M. Shapiro. “What drives media slant? Evidence from U.S.
daily newspapers.” Econometrica 78(1) (2010): 35–71.
10 See Garramone, Gina M. “Voter responses to negative political ads.” Journalism and
Mass Communication Quarterly 61(2) (1984): 250.
as an advertisement that mentions one’s opponent.11 By such a standard,

we have seen a dramatic increase in negativity in Presidential advertising
which has risen from a mere 10% of all political advertisements during the
Nixon/Kennedy dogfight, to an average of almost 90% as Clinton faced off
against Trump in 2016. In fact, on average, it was estimated that 96%
of ads run by Clinton’s campaign were negative toward Trump, and 83%
of the Trump campaign’s spots were negative toward Clinton according
to CNN.12 But the negativity of these numbers should be compared to
the previous king of Presidential campaign negativity. According to the
Wesleyan Media Project, in 2012, Barack Obama ran the most negative
campaign in recent Presidential history, with 58.5% of his broadcast and
cable ads being judged negative.13 That eclipsed the previous leader, George
W. Bush, who scored 55.4% negative. The 96% negativity of the Clinton
campaign and the 83% negativity of Trump’s campaign make Obama and
Bush appear to be boy scouts.
According to the authors of the book: “The Positive Case for Negative
Campaigning,” advertisements that are overly positive deprive voters of the
full range of information that they need to make up their minds. While
negative information has indeed been shown to have a greater impact
on overall satisfaction and repurchase intention than positive information
(Mittal, Ross, and Baldesare 1998), this depends to a great part on the
source of the negative information which impacts its credibility.14 Listening
to one candidate disparage another should be viewed and processed with
a great deal of suspicion. However, if a candidate were to describe their
limitations, that would present itself in the form of a two-sided appeal,
which as discussed in Chapter 11 of this book, would be perceived as
quite trustworthy especially if these negatives were left out there and not
11 See Mattes, Kyle and David P. Redlawsk and their book titled: The Positive Case for
Negative Campaigning. Chicago, Illinois: University of Chicago Press (2015).
12 “Negative ads dominate in campaign’s final days,” (2016) by Gregory Wallace, Novem-
ber 8th .
13 See the website: MediaProject.Wesleyan.edu
14 Mittal, Vikas, William T. Ross, and Patrick M. Baldasare. “The asymmetric impact of
negative and positive attribute-level performance on overall satisfaction and repurchase
intentions.” Journal of Marketing 62 (1998): 33–47.
refuted.15 However, if such negatives were game-changers, that candidate

then could never get elected to office, hence the tendency NOT to use such
a strategy and to avoid negativity about oneself is pursued at all costs.
Mattes and Redlawsk (2015) argue that useful decisions are rarely
made by comparing the positives of what’s proposed, offering the following
observation:
Is it really worse to have a candidate attack an opponent on issues,

when the attacks are accurate, than it is to have that same candidate
make false statements about his or her own record in presumably
positive ads?
However, in my opinion one should consider the situation that is 180 ◦

opposite to that discussed. That is, I think that it IS WORSE to have a
candidate attack an opponent on issues where the attacks are inaccurate,
than to have that same candidate make true statements about his or her
own record. The differences between our two positions is that Mattes and
Redlawsk (2015) make the assumption that the candidate is more likely to
lie about himself whereas, I believe he/she is more likely to lie about others
since the latter behavior is seemingly more the accepted and traditional
norm in American politics than is the former.
In any event, Merritt (1984)16 argues that negative political advertising
evokes negative affect toward both the sponsor and the targeted opponent.
Furthermore, Garramone, Atkin, Pinkleton and Cole (1990)17 found that
negative commercials may lead to greater candidate image discrimination
between sponsor and target and greater attitude polarization than their
positive counterparts. However, negative versus positive commercials did
not differ in their effects on involvement in the election, communication
behavior regarding the election and likelihood of turning out to vote
15 I can guarantee that Mr. Trump will not be discussing negatives as they relate to himself
anytime soon or in our lifetime.
16 Merritt, Sharyne. “Negative political advertising: Some empirical findings.” Journal of
Advertising 13(3) (1984): 27–38.
17 Garramone, Gina M., Charles K. Atkin, Bruce E. Pinkleton, and Richard T. Cole. “Effects
of negative political advertising on the political process.” Journal of Broadcasting &
Electronic Media 34(3) (1990): 299–311.
in the election. Moreover, negative political advertisements, similar to

rumors that are counter to one’s beliefs, are not believed or processed
by those who support the target of such negativity (Einwiller and
Kamins 2008).18 Therefore, the main influence that “contrast advertise-
ments” have on an election is on those who are undecided and oftentimes,
convincing those undecided individuals can serve to turn the election in
one’s direction. So why might such advertisements work to influence the
undecided population? We turn to this issue in the next section of this
chapter.
B. Why Negative Advertising Can Be Impactful

Back in Chapter 3 dealing with cognitive biases, we focused on the
“Negativity Bias,” which is characteristic of the tendency for humans to
more likely recall and give greater weight to negative statements, events,
characteristics and objects than they do for positive factors. So in a political
ad, or any ad for that matter, when we hear a negative statement about a
person, product or object, we tend to remember and recall it more vividly
and more easily than a positive statement. Part of this effect is because
we expect companies and politicians to make favorable statements about
their products and themselves, so a negative statement attributed to the self
stands out more in the communication and in one’s memory. This is in part,
the basis for the effectiveness of two-sided advertisements as presented in
Chapter 11.
Second, negative ads are said to be more complex than positive ones in
that every such ad has at least an implied comparison. For example, imagine
if Lindsay Graham were to say that Donald Trump is not a “Mainstream
Republican.” Then by implication he is maintaining by default that he
(Lindsay Graham) is a Mainstream Republican. The notion of what a
“Mainstream Republican” indeed is then needs to be addressed and clarified
in the receiver’s mind, and this complexity typically makes the reader
18 Einwiller, S.A. and Kamins, M.A. “Rumor has it: The moderating effect of identification
on rumor impact and the effectiveness of rumor refutation.” Journal of Applied Social
Psychology 38(9) (2008): 2248–2272.
process the information more attentively and at a deeper level, leading

to a greater impact on recall and possibly decision-making.
C. The “Sleeper” Effect

I know what you are thinking . . . no I’m not talking here about Ted Cruz’
filibuster when he read “Green Eggs and Ham” on the floor of the United
States Senate.19 Actually, the “sleeper effect,” has been discussed at length
in the Psychology and Marketing literature.20 My co-author on many
academic papers, (and fellow doctoral student at NYU back in the days)
Dr. David Mazursky wrote a seminal piece on this subject with Dr. Yaacov
Schul when both were professors at the Hebrew University in Jerusalem.
In their paper Mazursky and Schul (1988) noted that in many cases,
persuasive messages are often paired with discounting cues that suppress
immediate attitude change.21 Such examples that are reflective of marketing
applications involve remedial advertising (e.g., Mazis and Adkinson, 1976)
as well as political advertising (Lariscy and Tinkham 1999) and the use of
two-sided appeals (see footnote 10 of Chapter 4).22 Research has shown
that, over time, the “Sleeper Effect” is caused because the message and
the discounting cue become dissociated from one another resulting in the
message having a greater delayed than immediate impact on receivers’
attitudes. This phenomenon seems both empirically contradictory and
theoretically counter-intuitive since typically the effectiveness of a message
erodes over time due to a variety of factors inclusive of diminishing
recall.
19 Many believed that this reading encouraged more intellectual debate than on the average
day in the United States Senate. Thank god for Dr. Suess what else is better to read than
“Green Eggs and Ham?”
20 This effect was first coined in the research of Hovland, Lunsdaine and Sheffield (1949).
21 Mazursky, David, and Yaacov Schul. “The effects of advertisement encoding on the failure
to discount information: Implications for the sleeper effect.” Journal of Consumer Research
15(1) (1988): 24–36.
22 See Mazis, Michael B., and Janice E. Adkinson. “An experimental evaluation of a proposed
corrective advertising remedy.” Journal of Marketing Research 13(2) (1976): 178–183;
also Lariscy, Ruth Ann Weaver, and Spencer F. Tinkham. “The sleeper effect and negative
political advertising.” Journal of Advertising 28(4) (1999): 13–30.
FIGURE 3: British Political Advertisement
At this point in the book, I’m sure that I am putting you to sleep because
the description of the effect uses a bit too much academic terminology
which when one reads too often works better than Sominex to put you
quickly into deep slumber. So how can the “Sleeper Effect” be described
using a real negative political advertisement as an example? Consider the
advertisements in Figure 3 against Gordon Brown, supposedly created and
sponsored by the opposing Tories.
Over time, consistent with the Sleeper Effect, a message is likely
to become disassociated from its sponsor. So when an Englishman (or
woman), first saw this ad, they would be expected to dismiss it as being
“just politics.” Then, typically several weeks later when that same person
is making their voting decision, something in their mind recollects this
negative information. Gee, where and from whom did I hear that Gordon
Brown mishandled pensions? Where did I hear he doubled the national
debt? While you may have forgotten when or where or from whom you
heard such negative information, it still is being processed while amazingly
maybe not even be believed. This is a case where information that may not
be believed still has an impact on behavior similar to the case of rumor. If you
don’t believe this consider the following. Suppose that you heard a rumor
that your neighborhood McDonald’s was serving worm meat in their ham-
burgers instead of pure beef? Would you believe it? Probably not! Would it
impact your choice of where you go when lunchtime comes? Probably yes!
In fact, this very rumor was the subject of an academic article about rumor
detailing the impact of such a rumor in the Chicago area back in the 1980s.23
So negative political advertising can have a dramatic impact on one’s
campaign due to the Sleeper Effect, but again, only for a select group of
individuals. For example, those who wanted to vote for Gordon Brown
simply would cognitively block the advertising. Those against Mr. Brown
would simply have their negative expectations about him confirmed, and the
ad would have no impact. It is the undecided group who are most impacted
and, as said earlier in this chapter, this group is often large enough to decide
an election either way.
Finally, how does one counteract such a tactic? As the politician who
is the victim of the campaign, Lariscy and Tinkham (1999) maintain that
a direct counter-offensive should be launched as quickly after the attack as
possible using frequently repeated rebuttal messages designed to call into
question the credibility of the attacker. An alternative approach would be
for the target of the attack to use his/her own negative campaign, however
this then develops into an unending spiral of negativity, like what is shown
in Figure 4 below and descriptive of the 2016 political campaign.
For the voter, negative campaigns have their biggest impact upon you
when you are undecided and in the information seeking stage. It is best
to remain unemotional if you can because negative campaigns feed upon
negative emotions. If you can only recall the criticism but not the source, be
wary and be particularly suspect of negativity without any basis in fact, but
rather in puffery (or exaggeration). For example, in 2009, Jeff Corzine ran
for the governorship of New Jersey and lost in a campaign between three
candidates that the New York Times called “an ugly new Jersey contest for
23 Please see the article about rumor by Tybout, Alice M., Bobby J. Calder, and Brian
Sternthal. “Using information processing theory to design marketing strategies.” Journal of
Marketing Research 18(1) (1981): 73–79. Although few people admitted to believing the
rumor, sales in McDonald’s restaurants were down by as much as 30% in the affected area.
FIGURE 4: Cooper versus Ali?

governor.”24 One print advertisement that he used against Mr. Christie,

showed a picture of the future governor standing against a chain link fence
with the text “CHRIS CHRISTIE One set of rules for himself Another
for everyone else.” Clearly it is difficult to prove this contention, and
this can simply be evaluated as an exaggeration without substance, or
puffery.
The New York Times also reported on another negative Corzine
advertisement during his campaign that one could arguably maintain hit
below the belt. Here the New York Times wrote about a television ad Gov.
Jon S. Corzine used which “shows his challenger, Christopher J. Christie,
stepping out of an S.U.V. in extreme slow motion, his extra girth moving,
just as slowly, in several different directions at once. In case viewers missed
the point, a narrator snidely intones that Mr. Christie “threw his weight
around” to avoid getting traffic tickets.”
24 See, “Corzine points a spotlight at his rival’s waistline” by David M. Halbfinger,

New York Times, October 7th 2009, New York Region.

Chapter 13
Manipulative Marketing Research from

Questionnaire Design to Results
A. Introduction
In June of 2016, the British people voted by referendum to leave the
European Union by 51.9% to 48.1%, thereby rejecting the advice of the
Westminster party leaders and essentially taking a plunge into the political
unknown. “The Guardian,” a British daily newspaper, reported that the
decision in favor of “Brexit” “followed a bitterly close electoral race,
and represented the biggest shock to the political establishment in Britain
and across Europe for decades.” They concluded that the decision by the
electorate will “threaten the leaderships of both the then Prime Minister,
David Cameron, and the Labour leader, Jeremy Corbyn.” Other aftershocks
of the decision included a highly likely chance of the drafting of a second
Scottish referendum asking for independence from the United Kingdom,
instability of the British pound on world markets and a devaluation of British
companies on foreign exchanges. Indeed, within hours of the passing of
the Brexit referendum, all of these events occurred, inclusive of David
Cameron’s announcement that he would step down as Prime Minister in
October of 2016 and Angela Eagle’s challenging Jeremy Corbyn as leader
of the Labour Party.
One would think that with a vote as important as the Brexit referendum,
the ballot itself which served as the basis for the decision would be carefully
thought out before it was presented to the British people. The ballot as
designed is presented in Figure 1.
191
FIGURE 1: A Biased Ballot
At first glance, the ballot appears to be fine, in the sense that

individuals are told that they should VOTE ONLY once, and are given
each of the following choices (i.e., “Remain a member of the European
Union,” or “Leave the European Union”). Since EACH voter is given
ONLY one ballot, they would not realize that the choice of remaining
a member of the European Union always was presented as the top
choice. Why would this matter, you say? Interestingly, in his pioneering
research done in 1946, Solomon Asch demonstrated the presence of a
“primacy” effect in that subjects were found to hold a more favorable
attitude toward a person described as “intelligent–industrious–impulsive–
critical–stubborn–envious” than described as “envious–stubborn–critical–
impulsive–industrious–intelligent.”1 The position of two different sets of
adjectives significantly influenced the subjects’ attitudes toward the person.
Note that in this prior example, in the first sequence three favorable trait
characteristics were followed by three negative ones, while in the second
1 Asch, S.E. “Forming impressions of personality.” Journal of Abnormal and Social

Psychology 41(3) (1946): 258.
Manipulative Marketing Research from Questionnaire Design to Results 193
case the reverse sequence was used, and it was the reverse sequence which
was evaluated significantly more negatively.
Cognitive psychologists argue that a primacy effect is mainly due to
the fact that the first items one is exposed to has less competition from
other items for limited memory space (Waugh and Norman, 1965).2 Indeed,
many researchers in marketing and psychology have found primacy effects
to be important for advertisers seeking attitudinal change and favorable
attitude toward their products (e.g., Haugtvedt and Wegener (1994)).3
Such effects have also been evident for purchase intention and perceived
performance of a product (Buda and Zhang (2000)).4 Consider the vast
number of companies and services that are named “AAA” so that their
company name appears first in the phone book listings. Now the astute
reader might say that voting behavior or exposure to candidates is a
different animal than exposure to advertising. Clearly then these readers
are not familiar with Anthony Weiner, a former candidate for the Mayoral
office of New York City, and as of November 6th or before inmate at
a correctional institution where “exposure” takes on a whole different
meaning! Seriously, several models of voting behavior have been proposed
over the years by political scientists and cognitive psychology researchers.
For example, Kelley and Mirer (1974) state the case for a memory-based
model of voter choice. That is, the voter is said to canvass the likes and
dislikes of the leading candidates and major parties involved in the election.
Weighing each like and dislike equally, he/she votes for the candidate
toward whom there is the greatest number of net likes versus dislikes.5
Lodge, McGraw and Stroh (1989) alternatively propose a competing model
2 Waugh, Nancy C., and Donald A. Norman. “Primary memory.” Psychological Review
72(2) (1965): 89.
3 Haugtvedt, Curtis P., and Duane T. Wegener. “Message order effects in persuasion: An
attitude strength perspective.” Journal of Consumer Research 21(1) (1994): 205–218.
4 Buda, Richard, and Yong Zhang. “Consumer product evaluation: The interactive effect of
message framing, presentation order, and source credibility.” Journal of Product & Brand
Management 9(4) (2000): 229–242.
5 Kelley, Stanley, and Thad W. Mirer. “The simple act of voting.” American Political Science
Review 68(02) (1974): 572–591; Lodge, Milton, Kathleen M. McGraw, and Patrick Stroh.
“An impression-driven model of candidate evaluation.” American Political Science Review
83(2) (1989): 399–419.
of the candidate evaluation process, namely the online or impression

driven processing model, where processing occurs as information is
encountered. If processing and ultimately evaluation occurs as information
is encountered, then the candidate whose name is first on the list (or in the
Brexit case, the choice on the top of the list) is the preferred choice.
Again, the astute reader may argue that the primacy effect is NOT
supported by the Brexit vote, since the choice of the electorate was to leave
and not to stay, and stay was the choice on the top of the ballot. This
observation is correct and only suggests that a preference to leave the EU
may have actually been more strongly revealed among the electorate had
the ballot been counterbalanced where half of the ballots would have had
“stay” as the top choice and the other half “leave” as the top choice.
B. Revealing the Alternative Consequences of the Issue

Imagine for a moment, that the Brexit ballot looked as follows in Figure 2.
The difference from the actual ballot that was utilized in Figure 1 is that each
of the choices are embellished with a rather humorous commentary on the
rationale and meaning of each choice. While clearly such a ballot would not
and could not ever be utilized, choice decisions in any decision situation are
strongly influenced by emphasizing the consequences of one’s choice. For
example, in many states inclusive of California, there are many referendums
and propositions that are voted upon on Election Day. Oftentimes, each
party sends along to the prospective voter a pamphlet which details the
direct implications (from the party’s perspective) of voting either yea or
nay on the issue. Imagine that the Brexit vote were taken again say 2 days
after the initial vote with voters having already experienced volatility in the
pound sterling, the renewed threat of Scotland seceding from the Union,
and the weakening of the Labor leaders position, along with the resignation
of David Cameron. Clearly, the time and the events occurring when data
is collected strongly influences the outcomes. Indeed, this is known as a
“history” effect in marketing research, which is described as: “The effect of
extraneous variables as a result of an event that is external to an experiment
occurring at the same time as the experiment.”6
6 See the text, Marketing Research by Govind Chand Beri, 5th edition. New York: McGraw-
Hill, p. 86.
FIGURE 2: An Obscene and Biased Ballot?
C. Question Format Biases

I recently decided to purchase a car for my younger son who was going off
to college and planned on living off campus. As my son considers himself
to be a bit of a “bon vivant” with a touch of European flair (his mother is
French), he decided that he wanted to purchase a Fiat. Fiat is an Italian car
manufacturer which has recently been reintroduced into the U.S. market
after having been absent since 1983. Back then, the reputation of the brand
was not stellar leading to many jokes about its quality such as the joke on
the street that “FIAT” stands for “F ix It Again T ony,” however my son is
much too young to remember this. In any event, when we arrived at the
dealership we were asked to fill out a short questionnaire about our driving
habits, previous cars owned, as well as attributes that we valued in a car
such as style, comfort, quality and safety.
One of the first questions included on the questionnaire asked about our
degree of agreement/disagreement with the following statement: “I intend
to purchase a car this month,”
Do you agree? (Agree) 1–2–3–4 (Disagree). Interestingly, such a four
point scale forces the respondent into making a choice which is either
tilted toward the negative or the positive. Clearly, since the questionnaire
is presented to the respondent at a car dealership, the likely response is 1
or 2, and hence by responding in that manner, one begins to see oneself
as an individual who is getting closer to pulling the trigger and commit
to purchasing a car as opposed to committing to Bellevue state hospital.
Imagine, however, that the question was formatted as follows: “I intend to
purchase a car this month,” Do you agree? (Agree) 1–2–3 (Disagree). Here
the respondent is given the opportunity to respond with a neutral answer
by choosing “2” and hence may not see him/herself as ready to make such
a purchase. Therefore, reducing the scale by simply one unit can lead to
the consumer making a different choice. Bias can also be introduced in this
particular question by changing the decision time-frame. Imagine being
asked at the dealership upon arrival, “I intend to purchase a car today,”
“Do you agree?” (Agree) 1–2–3–4 (Disagree). Now this question has the
possibility of turning off the respondent or potentially (depending upon
how it is answered) making the consumer see themselves as someone who
makes impulse decisions, and therefore more likely than when they walked
into the dealership of purchasing a new car on that day.
I found it interesting that a later question on the questionnaire asked if
we were familiar with anyone who had gotten into a car accident and had
been injured. This was followed by a question which asked the respondent
to rate how important it was that the car had various characteristics of
which “safety” was included. Obviously, the sequence of having asked
the previous question regarding accident awareness, served to trigger the
typical respondent to identify “safety” as a critical attribute that the car
should excel in. This is similar to asking someone how many miles per
gallon their present car gets on the highway and then finding out that gas
mileage is enhanced in terms of serving as an important attribute in their
decision of which car to buy. The purpose of the approach taken in the
questionnaire was then clear when the salesman showed us a newspaper
article declaring Fiat as the safest car in New York.7
7 Interestingly, a month after I purchased the car, Fiat announced a recall of 1.1 million
automobiles in the United States because of unexpected “rolling” when the transmission is
not used properly, Fix-it-again-Tony?
Aside from using the questionnaire to enhance the importance of safety,

one can ask, does the process of asking questions at all influence behavior?
The section below addresses this issue.
D. The “Mere Measurement Effect”

You have finished your shopping about an hour ago, and find yourself sitting
in the mall waiting for your significant other to pull herself away from the
clothes rack at H&M when all of a sudden, you are approached by a neatly
dressed market researcher with a clipboard and a questionnaire. He politely
asks: “Hi Sir, would you mind filling out this 2 page questionnaire about
your purchase behavior, you can win a $25 Amazon gift card certificate.”
Bored out of your mind, you agree and spend the next 15 minutes filling out
what appears to be silly questions such as the following: “When will the
next new (not used) CAR (not truck or van) be purchased by someone in
your household?___6 months or less; ___7–12 months; ___13–24 months;
___25–36 months; ___over 36 months; ___Never.”
Unbeknownst to you, it turns out that there were two versions of
the questionnaire you filled out, one with the car question on it and the
other (the control) without. About 6 months later, the marketing researcher
then reported, that the group of individuals who were asked the purchase
intention question for the car were 37% more likely to have actually
purchased a car, relative to the control group who were not asked such
a question (The actual percent of those who purchased the car in the
“question” condition was 3.3% versus 2.4% in the control condition). Not
only is this result amazing, it has been replicated many times using different
purchase intention questions and different populations. The first study
finding this effect, as discussed above, was conducted over 20 years ago
by a young researcher from NYU, my alma mater, named Vicky Morwitz
along with two researchers from the Wharton School,8 who first observed
this effect and coined its’ name as the “mere measurement effect” a name
8 Morwitz, Vicki G., Eric Johnson, and David Schmittlein. “Does measuring intent change
behavior?” Journal of Consumer Research 20(1) (1993): 46–61.
that honored the mere exposure effect discovered by Zajonc and initially
discussed in Chapter 3.”9
I must admit that this effect is extremely disturbing, since it suggests
that if you answer a question that simply asks you about your intentions,
there is a greater probability that those intentions will become a reality.
So be careful about what questions you answer and try to remember this
effect. But there are some people out there who think this effect is better than
wonderful. For example, my geeky friend who is a divorced, balding, short,
portly built marketing professor told me recently that he thought Morwitz’
article was the best article he ever read in the history of marketing. He told
me that he goes to different singles mixers at his synagogue every week and
always “bumps” into an attractive Brooklyn Decker look-alike (personally,
I think he bumps into her on purpose although arguably it is hard to avoid
her). He said that each time he meets her, he asks her the following question,
no it’s not whether she would go out with him, rather it is how likely is it
in the next 3, 6, 9 or 12 months that you will go out with a portly, short,
balding, divorced marketing professor. The result is, she still hasn’t said
yes, but he says that Morwitz’ research suggests that eventually she will.
Good luck to him!
E. Written Framing of the Choice Alternatives

Research has shown that labeling influences consumer decision-making
and choice. Consider choosing between the purchase of ground beef that
was alternatively described as being either “75%” lean or “25%” fat. Now
if a butcher gave you both packages in sequence, there is a high probability
that you would recognize that the ingredients contained in one is the inverse
of the other. Simply said, if meat is 75% lean then it must contain 25% fat.
However, in marketing and in survey research, the seller typically has the
option regarding the way in which they want to present their product to
the target market. Just consider the fact that when I was a kid, “Hi-C” fruit
juices were described as containing 10% fruit juice which is a lot better
than saying they contained 90% water or possibly x% chemicals!
9 Zjonc, Robert B. “Attitudinal effects of mere exposure.” Journal of Personality and Social
Psychology Monograph Supplement 9(2) part 2 (1968): 1–27.
So the question to be asked is that if consumers were surveyed and

asked about their purchase intentions regarding ground beef that was either
75% lean or alternatively 25% fat, would they be astute enough to be
indifferent between the options? Research by Levin (1987) shows that
they are not.10 Not only did respondents significantly favor the 75% lean
beef, but their evaluations revealed that their perceptions of the beef was
of being less greasy, better tasting and of higher quality when the beef was
described in terms of percent-lean rather than percent-fat. It is only when the
consumer actually tries the product that the initial framing effect is mitigated
(Levin and Gaeth 1988).11 That is, ground beef containing 25% fat was
found to be just as tasty as beef that as 75% lean when actually consumed.
This framing effect is particularly problematic when choices are made
in terms of health options, and it is problematic even when it is the
doctor making the recommendation. For example consider the doctor’s
decision as to whether or not to recommend that a patient undergo an
extremely risky quadruple bypass operation. When the risk of survival
for the operation was presented as having a 90% chance of success, as
opposed to a 10% risk of mortality, doctors were found to be significantly
more likely to recommend the operation for their patient (Marteau, 1989).12
Here, of course the framing effect cannot be mitigated by experience as the
operation, if undertaken, either leads to the desired or undesired result.
F. Visual Framing of Choice Behavior: A Focus on Color

Approximately 20 years ago, four authors in marketing published a seminal
paper discussing the effects of color as an executional cue in advertising.13
What was most fascinating about the paper was that its findings were
10 Levin, Irwin P. “Associative effects of information framing.” Bulletin of the Psychonomic

Society 25(2) (1987): 85–86.
11 Levin, I.P. and Gaeth, G.J. “How consumers are affected by the framing of attribute
information before and after consuming the product.” Journal of Consumer Research 15(3)
(1988): 374–378.
12 Marteau, Theresa M. “Framing of information: Its influence upon decisions of doctors
and patients.” British Journal of Social Psychology 28(1) (1989): 89–94.
13 See Gorn, Chatttopadhyay, Yi and Dahl. “Effects of color as an executional cue in
advertising: They’re in the shade.” Management Science 43(10) (1997): 1387–1400.
counterintuitive in the sense that while most of us would believe that

the actual color of a product or brand would most greatly impact our
feelings about the object, the actual color (or hue) was NOT found to
be the driving factor influencing evaluation. Rather, other components or
factors that make up the color of an object were found to be even more
influential in influencing your perceptions of that object. If you recall, we
briefly discussed the impact of color on judgment back in Chapter 8 of this
manuscript.
So, is color truly impactful in the consumer’s brand choice? Let’s
examine a day in my life (while I sound like Paul McCartney here, I certainly
don’t sing like him). When I get up, I take a drive in my rented red Ferrari
(I wish), and have a cup of coffee at Starbucks. When I went to the rental
car location, I could have rented from the yellow company (Hertz), the
red company (Avis), the green company (National) or the blue company
(Alamo). As I arrive at Starbucks, I have a choice of putting in real sugar or
artificial sweetener, I choose the latter since I must save some calories when
I eat the accompanying lemon loaf. The sweetener comes in pink (Sweet‘N’
Low), blue (Equal) or yellow (Splenda). I always put in “two pinks and one
yellow, and I have trained the Starbucks barista’s to use colors instead of
brands, after all it is easier for both of us.14 I get back in my car and go
to Stony Brook University where everything is Seawolf red, but I am used
to this as USC, my prior place of employment was cardinal and gold and
there we learned to hate powder blue and gold since those were the colors
of UCLA.15
On the way home from work, I pass a construction site and there is a
John Deere tractor in traditional green and yellow along with a Caterpillar
earth mover in nothing else but bright yellow followed by a Kubota track
loader in orange. Finally, I get home and open a can of beer, I know it is
a Heineken as the bottle and packaging is green, while LaBatt is blue and
Corona is yellow like the beer itself and the lemon that goes inside.
Now you might ask, when it comes to color, what possibly could have
more of an impact on my perceptions than the actual color (hue) of that
14 You should see the strange stares I get on line at Starbucks every morning.
15 No, I’m not referring to the University on the corner of Lexington Avenue.
object? Well, let’s do a little exercise to explain what I mean. I want you,
the reader to think about the Alfa Romeo Spider. Now, I give you the right
to fantasize that Alfa Romeo has given you a car for free, with the only
requirement that you name the color you want the car to come in.16 To
show that I am possibly psychic, I’ll present you with the image of the Alfa
Romeo Spider on the next page of this book in Figure 3 and bet that the
color of the car as presented represents your preference or close to it. Now
that you have imagined the car. . . turn the page.
So was I right? Were you thinking about a bright yellow as the color of
your car? Well, if not, I bet it was an intense red. While we can describe the
car in your mind as intense yellow or possibly brilliant red, strictly using the
car’s hue (or pigment) alone would do injustice to what is really impacting
your impression of the car in your mind. So what other components of color
“drive” our car preference then if it is not hue alone?
A second dimension of color relates to its “value.” This component
is defined as the degree of darkness or lightness of the color relative to a
neutral scale that extends from pure white to pure black. Low-value colors
are said to have a “blackish” quality to them as if the color black was
mixed into the pigment. Alternatively, high-value colors have a “whitish”
quality to them giving the mix a pastel and dreamy look, (think of the
paintings of Renoir), as if the color white was blended into the mix. Gorn,
Chattopadhyay, Yi, and Dahl (1997)17 hypothesized and showed that high
chroma is more closely linked to eliciting impressions of excitement rather
than relaxation, whereas high value is more closely linked to eliciting
feelings of relaxation as opposed to excitement.18
As the image of the Ferrari and that of the Alfa Romeo Spider naturally
evoke excitement, as in James Bond kind of excitement, it is clear that
16 You are also free to imagine who you might have sitting next to you on a date and I
guarantee you that this person would NOT look like the date you would have if you were
driving a 1956 Rambler station wagon.
17 See, Gorn, Gerald, Amitava Chattopdadhyay, Tracey Yi, and Darren W. Dahl. “Effects of
color as an executional cue in advertising: They’re in the shade.” Management Science 43
(1997): 1387–1400.
18 The authors also argue that excitement and relaxation represent independent dimensions
of arousal based upon the research of Smith and Apter (1975).
FIGURE 3: 2016 Alfa Romeo Spider
any color chosen for the exterior of the car should be consistent with this
impression. Therefore, it is important for both cars to utilize colors which
are high in chroma. Going back to the images shown above, I’m sure this is
what you had in mind when you imagined what the car would look like. This
is also the reason that advertisements for Las Vegas as a tourist destination
often use high-chroma images of the Las Vegas skyline to get you even
more excited to go there and happily lose your money! Similarly, products
that wish to convey an image of relaxation should use high “value” in the
imaging of their product giving it that dreamy pastel like aura, such as
never ending vistas at resort locations in relaxing venues such as Molokai
at sunset overlooking the sun sinking into the blue Pacific.
If we layer on to high chroma’s linkage to excitement the finding that
the color red is also linked to excitement (LaBrecque and Milne, 2012),
this suggests that you the consumer can be more convinced that a brand
is exciting if it is presented in a high chroma red.19 Alternatively, blue
19 Labrecque, L.I. and Milne, G.R. “Exciting red and competent blue: the importance of
color in marketing.” Journal of the Academy of Marketing Science 40(5) (2012): 711–727.
has been identified as being both relaxing and competent (Guilford and
Smith 1959).20 Therefore if the goal of the advertiser is to convince the
consumer that their product is relaxing and competent, the product should
be tinted in a high-value blue. Such an approach would be impactful for
“Ativan,” a benzodiazepine whose usage is prescribed to reduce anxiety.
One look at the packaging shows a high-value blue color. Alternatively,
the methamphetamine utilized by the Third Reich and partly responsible
for the success of the German blitzkrieg through the Ardennes forest in the
second world war, featured a healthy usage of red in its packaging.21
Therefore, the recommendation here is to use color in a way that
emphasizes the characteristic of the product that the marketer wishes to
convey. That is, there should be congruence between product image and
the feelings that usage of a specific color evokes. This suggestion for the
seller explains why making Viagra a blue colored pill with blue packaging
is inconsistent with its purpose of usage, while the bright orange flame
used by Levitra is more product color appropriate. That said, the consumer
should become more aware of how color influences product preferences,
since product usage should be driven by need not by manipulation.
G. Visual Framing of Choice Behavior: A Focus on Background

Imagery and Experimental Design Usage
A two-cell experimental design study recently published in the online
journal of Technology Science by Jay Hoofnagle and Eduard Meleshinsky
(December 2015)22 examined the effect of background image in advertising
on consumers’ perceptions regarding the expertise of the spokesperson in
what the authors called an “advertorial.” According to the authors’, an
“advertorial” is simply an advertisement disguised as editorial content. In
20 Guilford, Joy P., and Patricia C. Smith. “A system of color-preferences.” The American
Journal of Psychology 72(4) (1959): 487–502.
21 The book “Blitzed,” (2017) by Norman Ohler devotes many chapters to this drug named
Pervitin, and its impact on the German populace and the Wehrmacht. The name “Pervitin”
seems appropriate for the perverted Wehrmacht who used the drug.
22 Please see “Native advertising and endorsement: Schema, source based misleadingness,
and omission of material facts,” by Chris Jay Hoofnagle and Eduard Meleshinsky. Journal
of Technology Science, 15th December 2015.
today’s social media-driven world, such an advertorial could appear in a

blog or on a webpage using the term “sponsored content.”
When consumers encounter an advertorial, they are subject to two
levels of potential deception. The first is a lack of understanding that the
communication is sponsored material similar to an advertisement. Hence,
they may approach this material with their defenses down, and may be more
strongly influenced by its content. Secondly, even if they believe that the
advertorial is sponsored, the consumer’s perception regarding who is the
sponsor could still be compromised.
Hoofnagle and Meleshinsky (2015) studied advertorials in the context
of a larger study designed to examine the targeting of consumers based
upon vulnerability. Of specific interest in their study was the examination
of two different advertorials for weight loss (diet) pills, both identical except
for the background behind the spokesperson for the sponsored product. In
each case, the spokesperson, a blond woman, is wearing a white oxford-
style shirt, and what could be perceived as a lab coat. She is not identified
however as a medical expert nor is she carrying or wearing any medical
equipment such as a stethoscope. For each of the two advertisements she
is quoted as saying: “While the pills do cause rapid weight loss (no doubt
about that), most people buy them as ‘speed’ pills.”
The only difference between the two advertorials is that in one case,
the endorser appeared in front of a white background, in the other she
appeared in front of what could be perceived as shelving holding a blue-
toned set of products. Interestingly, across both conditions 27% of those
surveyed when asked: “Was the material on diet pills written by journalists
and editors working for the website, or by someone else?” thought that it
was written by journalists and editors and therefore was perceived as an
informative article as opposed to a persuasive communication. The images
of both advertorials are shown as below in Figure 4.
Respondents were then asked: “What job does the person in the picture
have?” Results varied significantly as a function of the two conditions.
Around 32% thought her to be a model in the white background condition,
while this number reduced to 18% in the blue product background.
Interestingly, when the blue products were behind her, a majority of those
surveyed (60%) believed that she was a medical professional, whereas when
FIGURE 4: Two Different Advertorials
she appeared in front of a white background the number was reduced to

23%. These are significant differences!
If we are to assume that a “medical professional” holds some degree of
credibility and sway with the general public (specifically as compared to the
attribution that she is a model), then we can conclude that the background
behind her, since it was the only component between the two different
advertisements to vary, contributed to the effect or even caused it. However,
an astute reader will notice that the background itself varied two different
design components, that of the color (i.e., blue versus white), and that
of the presence or absence of product shelving behind the spokeswoman.
Hence, we can conclude that the background impacted one’s belief in her
credibility as a spokeswoman, but we do not know whether to attribute
this to the product shelving, the color blue or an interaction between them.
My money however is placed on the products, since such an image places
her within the context of various medicines, most likely leading to the
conclusion that she is some form of medical professional.
Whatever the issue with the authors’ experimental design, the study
reveals issues at two levels that threaten the consumer from making correct
inferences from the viewing of advertisements. First, many consumers
were found to incorrectly consider an advertorial nested in a simulated
blog to be editorial in nature despite a disclosure (small heading above the
story indicating it was “sponsored content”). To address this, the authors’
suggested that in addition to more clearly labeling the internet content as
advertising, the FTC could follow the lead from promotional efforts taken
over 100 years ago where embedded in the content itself are specific labels
in the advertising that describe it as an “Advertorial.” Such an approach
was actually taken in the newspaper titled the Rotarian back in 1914 and
repeated in the Atlantic as far back as 1951 where the content of publicity
appearing as an editorial was described as an “Atlantic Public Interest
Advertisement.”
Secondly, as the authors’ note, the FTC is well aware of the fact
that consumers have a potential to identify endorsers in medical garb as
doctors, specialists, nurses or simply medical practitioners. Hence, in its
2009 guidelines it specified the following:
Whenever an advertisement represents, directly or by implication, that the
endorser is an expert with respect to the endorsement message, then the
endorser’s qualifications must in fact give the endorser the expertise that
he or she is represented as possessing with respect to the endorsement.23
This probably explains the approach taken in the commercial that we all
are familiar with regarding a diarrhea medication. Here, the spokesperson
appears on camera with a white-coat, takes off his glasses and speaks
directly into the camera with the following words: “I’m not a doctor but I
play one on TV,” He then goes on to recommend a specific pharmaceutical
to the consumer. So in a sense, the mention that the individual is not a
doctor, but rather plays one on TV, still is thought by the advertiser to
influence the consumer because of his role on TV and not his role in life.
23 Please see 16CFR 255.3.

If you believe that the consumer would be insulated from such an effect,
you may be right, but yet reconsider the study discussed above, a simple
research design approach such as the use of a shelf of medications behind
the spokesperson led to almost a tripling in the consumer’s inference that
the spokesperson was a medical professional. Quite amazing indeed!
Enough to give the consumer . . . . diarrhea! or worse.

Chapter 14
Winning Strategies for Online Purchases

(eBay, Priceline and StubHub)
A. Introduction
As we have seen in this book, humans as a group generally behave in certain
predictable ways that are often influenced by cognitive, memory-based or
social biases. If you are aware of such biases, and can avoid behaving as the
majority behaves in specific purchase situations, you can often outmaneuver
others, particularly when prices of goods are not set in stone. While you
might be thinking that prices are ALWAYS set in stone, this is a false
assumption. While the supermarket may not be willing to bargain with you
regarding a can of peaches or a bunch of grapes, consider the opportunity
you have to buy for less when bidding for a product on eBay or when
offering a bid for a hotel or car on Priceline. Even ticket prices on StubHub
change the closer you get to the event, and believe it or not, when buying a
stock, it may not be wise to purchase after it has gone up significantly since
it may be due for a quick drop.
A simple examination of stock prices on Thursday, October 5th 2017 for
MannKind (MNKD), a company that makes an inhaler to counter type I and
type II diabetes, illustrates this point. After having risen in price in the prior
3 days from a level of $2.05 to $3.54 at the close of business on Wednesday,
October 4th (a respective rise of 13%, 19% and 26% on each of these 3 days),
the stock opened at $3.62 on Thursday. Within less than 2.5 hours, had risen
to an 18 month high of $6.48, only to close below $5.00 on the same day.
I had seen that pattern many times before, and hence sold half of my shares
209
(which I bought on Monday) near the top price. The purchase was triggered,
through a “System I,” sensitivity to price and volume movements that I had
observed after almost 40 years of losing in the stock market . . . seriously
I had seen such a trend before, knew I could ride it up, but also realized that
I had to sell on a hair trigger. While I cannot teach stock trading by emotion,
let’s see how we can develop winning strategies that are more cognitively
anchored in various commercial marketing scenarios.
Let’s take a specific example. Consumers are often tempted for the need
for closure. This was covered by an examination of the Zeigarnik effect in
Chapter 5 dealing with memory biases. In our fast paced and entitled society,
when we want something we often want it now and not later. Consider
the purchase of a relatively recent “hot” new book such as “Flash Boys,”
written by Michael Lewis and focusing on high-frequency trading. When
the book first came out in hardcover on March 31st of 2014, a high profile
debate between Brad Matsuyama (IEX Group President), William O’Brien
(BATS Global Markets President) and Michael Lewis among others aired on
CNBC 2 days later. Both Mr. Matsuyama and Mr. O’Brien have different
positions on the benefits or disadvantages of high frequency trading and
were mentioned as protagonists in the book. The debate was described by
YouTube as “The Fight That Stopped New York Stock Exchange (NYSE)
Trading.” My friend who works at Reuters called me on my cell phone and
told me that I had to buy the book, and I listened to him, purchasing the
book immediately at an airport bookstore for the full price listed on the
inside cover of $27.95.
Now, I’m not going to say that it wasn’t only a great read, it was
everything I thought it would be and more. The problem was that I first
opened the book a month after I bought it, and finished reading it a full
3 months after the book came out. So why did I run to buy it when it first
came out? Well because I had to have it even though I knew I had no time
to read it since there were two books on my list ahead of it. Even worse is
that if I had waited just 2 days later I would have saved 30%1 since Barnes
and Noble put it on their best seller list just 48 hours after it was released.
1 Actually 40% since I get 10% additional for being a member. That comes to $11.18 plus
the tax on that amount!
Winning Strategies for Online Purchases (eBay, Priceline and StubHub) 211
To add salt to the wound, the price of the book on Amazon a week before I
began to read it was only $10.48 new and $10.00 used. So, I paid three times
the amount for the book, for the right NOT to read it on the day it came out.
The premium that I paid represented an itch that had to be scratched but
also an example of the human desire to have something that is new rather
than old. The basis of this need is anchored in a requirement for stimulation
or arousal that is based upon a focus on a deviation from what is familiar.2 To
test this effect, I recently gave my undergraduate students a choice between
viewing an Academy Award Winning Best Picture titled “The Apartment”
starring Shirley MacLaine and Jack Lemmon or Draft Day, a poorly rated
but very recent comedy dealing with the Clevland Browns draft decisions
starring Kevin Costner and Jennifer Garner. Even though “The Apartment”
was also a comedy and even though it was critically acclaimed, all 53 of
my students chose to see Draft Day.3 When I asked why, in general they
said that “The Apartment” was an old film which wasn’t relevant to them
today. I then repeated the experiment again, giving the students a choice
between viewing 22 Jump Street starring Jonah Hill and Channing Tatum,
a sequel to 21 Jump Street, or the “The Internship” starring Owen Wilson
and Vince Vaughn. Both movies were rated similarly at the time they came
out but 22 Jump Street at the time of the experiment was recently released
while “The Internship” had been released about a year ago. The students’
preference (for those who had not seen either movie) was 85% in favor of
the Tatum/Hill film as opposed to that of “The Internship.”
So, the lesson is that films and books do not have a long shelf life
evidenced by the typical 40% drop in ticket sales from the first week a given
film comes out to the second week after release and the length of time new
movies stay in theaters appears to be shortening. Waiting therefore brings
2 See van Trijp and Johannes Cornelia Maria. “Variety-seeking in product choice behavior:
Theory with applications in the food domain.” Dissertation, Waginengin University, The
Netherlands, 1995, also van Trijp, Hans CM, and Ellen van Kleef. “Newness, value and new
product performance.” Trends in Food Science & Technology 19(11) (2008): 562–573.
3 You really have to be pretty desperate for entertainment if you choose to watch a movie
about the Cleveland Browns drafting football players, just look at their record … does Johnny
Manziel come to mind? Thank god they drafted in front of the N.Y. Giants in the 2018 NFL
draft. If anyone else had that honor, the Giants would not have been able to draft SaQuon
Barkley.
rewards for the consumer, a lower price in terms of books and a greater
chance to be able to view the film at the time and theater you wish in the
case of movies. Let’s now investigate some eBay strategy that allows you
to benefit from “hard wiring” that other consumers may suffer from.
B. The Loser and Winner’s Curse

Bidding on eBay can be a rewarding experience if you know what you
are doing and a disaster if you do not. According to Ariely and Simonson
(2003), there are two types of regret that one can experience when bidding
in an auction.4 The first is called the “Loser’s Curse” and represents the
occasion where the bidder did not bid high enough to win the auction,
and hence experiences regret that they should have bid higher to overcome
the competition. It is this type of regret that is played again and again in
your head, as you tell yourself, “If I just made one more bid I would have
won the item.” Interestingly, this is not necessarily true because eBay is
structured as a second price auction. That is, the winning bidder only has to
bid a required increment higher than the second highest bidder in order to
win the auction, and this higher increment plus the second highest bidder’s
maximum bid is revealed as the winning bid. Let me give you an example.
Suppose that the current price of an item that you wish to win is $25.00
and that this price truly reflects the highest price the current leader wants
to pay for the item. If you decide to bid $35.00 to make sure that you
win, eBay will only show your bid as $26.00 since the increment required
to exceed the current leader’s maximum bid at these price levels is only
$1.00.5 But suppose that the present leader who seemingly bid only $25.00
indicated internally in their bidding on eBay, that the maximum that they
were willing to bid was $30.33. If you bid $35.00, eBay would then reveal
your bid as $31.33, since you must exceed the maximum amount the prior
leader would bid by an increment of $1.00, again at these prices. If no one
4 Ariely, Dan, and Itamar Simonson. “Buying, bidding, playing, or competing? Value
assessment and decision dynamics in online auctions.” Journal of Consumer Psychology
13(1) (2003): 113–123.
5 This increment changes by getting larger as the dollar amount of the bid gets higher. For
example, the increment for a $100 item is presently $2.50. Hence only bids of $102.50 or
more would be accepted if you wanted to bid higher than a winning price of $100.
TABLE 1:
Current Price Bid Increment
$0.01–$0.99 $0.05
$1.00–$4.99 $0.25
$5.00–$24.99 $0.50
$25.00–$99.99 $1.00
$100.00–$249.99 $2.50
$250.00–$499.99 $5.00
$500.00-$999.99 $10.00
$1000.00–$2499.99 $25.00
$2500.00–$4999.99 $50.00
$5000.00 and up $100.00
ever bid again, you would win the item for $31.33, and the former leader
would think that they lost the bidding by an increment of $1.00. What they
would NOT realize is that you had a hidden maximum bid of $35.00 and
they would have had to exceed that hidden maximum to win the item. This
false perception that you came close to winning (losing by only $1.00) only
serves to increase the frequency and intensity of the loser’s curse. Above,
in Table 1, is the current bidding increments dictated by eBay as a function
of the current bid price in the auction.
So what to do? EBay offers you an alternative to bidding for those who
are sensitive to losing and who want to avoid the loser’s curse. That is you
can “Buy It Now,” as some sellers offer you the opportunity to buy the item
for a set price. However, University of California-Santa Cruz researchers
have found that this set price is typically significantly higher than the price
paid for identical items sold in an auction context.6 This is because bidders
are paying a premium for the right to block others from purchasing the item,
and for the right to win the auction immediately. That is, instant gratification
costs money.
Other researchers report that the “Buy It Now” price serves as an
external reference price for the item. That is, by setting it at a high amount,
6 See Anderson, Steven T., Daniel Friedman, Garrett H. Milam, and Nirvikar Singh. “Buy It
Now: A hybrid internet market institution.” UC Santa Cruz Economics Working Paper 565
(2004).
the seller is signaling to the buyer an inflated worth of the item.7 Similarly, in
fact, I conducted a series of 176 auctions on eBay during 2004 along with
two other researchers from the University of Southern California, where
I manipulated the presence or absence of the requirement of a minimum
bid in the auction (the requirement that the first bid must meet or exceed
this level) or a reserve price (i.e., the price level the auction must exceed
before I was willing to sell the item).8 Both the minimum bid and reserve
price served as lower price anchors,9 providing information to potential
bidders regarding the worth of the item for sale. For example, the reserve
bid tells the buyer the price at which I, the seller, would be willing to
sell the item, and if you think about it, why should a buyer pay more
than the price the seller is willing to sell the item for? Interestingly, those
auctions that did not have a minimum bid requirement or a reserve
price sold for the average highest price, and for the consumer, these
could be the items to avoid. The reason for the high price in this case is that
the elimination of minimum bid requirements and reserve prices allowed
everyone to participate in the auction unconditionally starting with the price
of a penny. This gets the bidding process going like a snowball as everyone
tries to top the competition with the first bidder thinking/dreaming that they
can buy the item for a ridiculously low price like a penny. This creates a bad
selling environment for the purchaser, since they are bound to go up against
a lot of competition and will generally pay higher for the good relative to
an auction which features a minimum bid or reserve price. In fact for items
which had no reserve price, the lack of a minimum bid requirement resulted
in a 27% price premium for identical sold items.
7 See Leszczyc, Peter TL Popkowski, Chun Qiu, and Yongfu He. “Empirical testing of the
reference-price effect of buy-now prices in internet auctions.” Journal of Retailing 85(2)
(2009): 211–221.
8 Kamins, M.A., Dreze, X., and Folkes, V.S. “A field study of the effects of minimum and
reserve prices on internet auction bids.” Journal of Consumer Research 30(4) (2004): 622–
628.
9 I set the minimum price of the item offered for sale (coins) at $2.00 typically below the
true value of the coins. In addition, I set the reserve price at approximately 60% of what the
item was worth. I did this because I wanted to sell the items and was studying the price at
which they were sold for.
But before we give up on bidding for an item that has a “Buy It

Now” option, let’s consider the following. Sometimes sellers are lacking
knowledge that you may have, and if you see an item offered for sale that you
value at a significantly higher amount than the “Buy It Now” price it is being
offered for, DO NOT hesitate to buy it. In addition, oftentimes bidders will
hesitate to bid on an auction that has a minimum bid requirement. People
simply do not want to be told that they have to bid a certain amount and
have psychological difficulty in being required to make a high first bid. This
provides an opportunity for a clever buyer. For example, I consider myself
to be an expert in Indian pennies. I know how to grade their condition
and I know their value since I am an amateur numismatist. One day, I was
looking on eBay for an 1877 Indian penny. There were only 852,000 of these
pennies minted and in the condition of “Very Fine,” Coin World, a trusted
publication in the numismatic arena, values the penny at . . . $1,575.00.
I came across an 1877 in what I considered to be “Very Fine” condition
but the seller wanted a first (or minimum) bid of $800.00. No one had bid
so I watched the auction like a hawk, maybe six or seven times a day each
day until the final day of offering came along. With 12 hours left to go in
the auction, still no one had bid. Now, you must understand that the first
person who bids “breaks the ice” for others to bid. Why? Because it is a
significantly harder jump to go from $0 to $800.00 than it is to bid the
next required increment of $10.00 once $800.00 has been bid (which eBay
requires at that level of bidding). Hence the best strategy to pursue is to
hold off from bidding until the last possible second, so that other potential
bidders are left with little time to realize that a bid has been placed, and also
little time to react. The strategy that accomplishes this objective is called
sniping, or bidding at the last possible second (more on that later). So with
two seconds left in the auction, I bid the required minimum of $800.00, no
one else bid and I won the auction for that price.
The second type of regret is called the “Winner’s Curse,” The famous
University of Chicago Economist, Richard Thaler first coined this term in
1988,10 describing this form of regret as having paid more than anyone else
for the item. Actually, when you think about it, the good news with this type
10 Thaler, Richard H. “Anomolies: The winner’s curse.” Journal of Economic Perspectives

2(1) (1988): 191–202.
of regret is that you won the auction! The bad news is that you were the
one who paid more for the item than anyone else on the planet! This means
that either you have different information than others regarding the item, or
quite simply you may have become too emotionally involved in the notion
of winning the auction at all cost, that is, winning for the sake of winning.
One way to win an auction at a reasonable price however is to “snipe,”
and such a strategy can be exhilarating if you are the one doing it, and
downright depressing if you are on the receiving end. Consider what
happened to me not so long ago. Forty years ago, I began a collection
of Standing Liberty Quarters. I completed the collection quickly with the
only exception being the elusive 1918/7-s overdate.11 The hole remained
in my collection until recently when I noticed that this coin was up for sale
on eBay. Seven days before the auction closed, I bid $2,500.00 for the coin,
making sure that I did not tell my wife! I watched the auction on a daily
basis and on the day the auction closed, I held a vigil in front of the computer
screen with it becoming a non-stop obsession. With one hour to go, I was
still the top bidder. Thirty minutes passed, then 45, and finally with one
minute left in the auction, my name was still there in “lights” as the leading
bidder! In my mind, I could literally see myself putting the coin into the
one remaining slot in the coin book and accomplishing a life’s dream.12
He started the final count-down, 10 seconds remaining, nine, eight, seven,
he could almost taste victory! Three, two, one and what’s this? Someone
else had placed a bid at the last possible second, and the dream faded into a
harsh and empty reality. I felt like a “deer in the headlights!” I had no time
left to react except to watch in shock as the auction closed with another
person’s name as the winner and the hole in the coin book getting bigger
and bigger with each passing second. There would be no celebration, and
no closure to my collection, as I had just been “sniped.”
Sniping is a strategy of placing a bid on an item in the very ending
stages of an auction with a predetermined ending time in an attempt to win
the auction. Such a strategy conceals the intentions of the bidder until the
last moments of the auction and minimizes the possibility of other opposing
11 This coin, has the “8” imprinted over the “7” on the date and is extremely rare.
12 The need for closure is great as we discussed in Chapter 5 when explaining the Zeigarnik
effect.
bidders submitting higher bids due to the short period of time left to respond
to one’s bid. In 2011, I conducted a study with AviNoy, David Mazursky, and
Yael Steinhart, all Israeli researchers with ties to the Hebrew University, to
better understand sniping as a strategy.13 We found that sniping is utilized as
a strategy significantly more often when there is more interest in the auction
either in terms of viewers or actual bidders and when more information
about the bidders is provided.14 Therefore, we quickly realized that sniping
can be described as a social phenomenon whose incidence is influenced by
social cues. Yes, there are those individuals who participate in eBay and
who develop strong feelings about other bidders. Some of these individuals
do not hesitate to bid against someone else at the last moment or before not
because they want to win the item, but rather because they want to prevent
YOU from winning it! This is true even though bidders typically cloak
their names using bidder identities that they come up with. For example,
my identity is DavidJosh, but that said, what’s to prevent someone to have
just as strong a desire to beat DavidJosh as to beat Michael Kamins? As
I said many times in this book, we as humans are not always logical, counter
to what the typical economist thinks as evident in the “rational man” theory!
The use of sniping helps to avoid the pitfalls of competitive auctions
where your own bid can encourage bidding from other bidders. That is, if
you did not place a bid, other bidders may not have placed a bid (especially
if they were already winning!). Indeed, Marcoux (2003) actually discusses
different types of bidders (e.g., stalkers, nibblers, etc.) who use others’
participation or interest in an auction as a cue, lending further support for
the belief that sniping could be motivated by social dynamics which occur
in the auction environment.15 Bidding late however has the advantage of
ensuring that the competitor’s access to your information when formulating
their bid is limited. As Marcoux (2003) further notes, if the sniper is known
to the bidding community or is known as an expert, they may not want to give
13 Kamins, Michael A., Avi Noy, Yael Steinhart, and David Mazursky. “The effect of social
cues on sniping behavior in internet auctions: Field evidence and a lab experiment.” Journal
of Interactive Marketing 25(4) (2011): 241–250.
14 In eBay each bidder uses a pseudonym identity which typically is not one’s real name.
However, in certain auctions characterized as “private” each bidder’s “name” is not visible.
15 Marcoux, Alexei M. “Snipers, stalkers, and nibblers: Online auction business ethics.”
Journal of Business Ethics 46(2) (2003): 163–173.
away their interest in the auction at an earlier point in time, since this may
trigger others to enter, especially if they value the participant’s reputation
as a connoisseur of the product area. For example, I recently bid on a roll of
Buffalo Nickels (nickels minted in the United States between 1913–1938).
I bid a maximum of $35.00 to exceed the previous leader whose bid was
$25.00. EBay then placed my bid at $26.00 (the prior leader’s highest bid
plus an increment of a dollar). Immediately, a “nibbler” came along and bid
seven straight times at one dollar increments, setting the price at $33.00. If
I had sniped at the last moment, the nibbler probably would not have been
motivated to bid above my bid since he/she would not have had time to
even place a single bid! Most probably, sniping would have ensured that I
win the item for $26.00 instead of $33.00 (e.g., $25.00 plus an increment of
$1.00). In addition, why do people nibble? They do so because if you allow
them to bid in small increments, it is easier psychologically to bid a higher
amount than to do it in one swoop or jump. The best strategy is simply to
bid your reserve price (that is, the price at which you value the item) and
call it a day! If you win, you win. If you lose, you lose, and the emotion
which often drives irrational bidding is taken out of the bidding process.
C. How to Increase Your Chances of Winning on eBay

In this section, I will present some ideas that will make your bidding strategy
more impactful. Imagine you are bidding on a hockey jersey from your
favorite team with your favorite player’s name on it. You know that in the
sporting goods store, the jersey goes for $109.95. So expecting to get it for
less online, you place your bid on eBay for $40.00 and plan to raise the
bid if it is exceeded by a competitive bidder. This strategy is problematic
for many reasons. First, you should bid only ONCE on eBay, and that bid
should represent the maximum amount you are willing to pay for the item,
no matter what happens in the auction. This is because if you enter the
auction with no solid understanding of the maximum amount you want to
pay, you are susceptible to emotionally reacting to what happens in the
auction rather than logically bidding on what the item is actually worth.
For example, say that with an hour left in the auction, another bidder whose
handle on eBay is “I Win Everything” bids above your bid. You might say
to yourself, “You THINK that you win everything huh, I’ll show you. . .”
So you bid above Mr. “I Win Everything.” Sure enough that bidder bids
above you, you bid above him and you are quickly engaged in an emotional
price war, bidding so that the other bidder does not win rather than bidding
to win the item for a reasonable price that you actually want to pay. Before
you know it, you will suffer from the winner’s curse in that you were the
only one to bid so high for an item that was not worth it! Do not let the
auction dictate the price you want to pay for the item, set the maximum
amount you are willing to pay BEFORE the auction begins and bid ONLY
once at that level.
As I said earlier in this book, my dad was an auctioneer and as a child
I heard him say many times, always wait till the end of the auction to bid
because every bid that you make that is countered, is used against you.
That is, your own bid elevates the price and if you make 20 such bids,
you effectively have raised the price 20 separate times with 20 separate
responses irrespective of what the competitors do.
In addition, say that you are willing to bid up to $100.00 for the hockey
jersey, this of course is a round number and therefore is likely to represent
the maximum amount that other bidders would be willing to pay for it.
If you place a maximum bid of $100.00 for the jersey, there are likely to
be many other bidders who bid EXACTLY that amount or slightly above
or below it. This makes the probability of winning with a bid of $100.00
very remote. However, if you were to bid an odd amount that nominally
exceeds the $100.00 valuation (say $102.73), you have greatly increased
the probability that no one else will have the same bid, and therefore your
probability of winning will increase. In addition, bidding below an even
number of significance . . .say $99.21 is likely to get you to LOSE the
auction, since others will be motivated to exceed it and bid a round number.
Again, avoid the lemmings and what we described earlier in Chapter 3 as the
cognitive biases called the “Bandwagon Effect” or “Herd Behavior Bias.”
There are other ways to increase your chances of becoming the winning
bidder on eBay. For example, always try to bid on an item where the auction
ends at odd hours of the day (e.g., late evening/early morning on the West
Coast of the United States) because there is a lower amount of active bidders
at those hours, and therefore a greater chance of your winning the auction.16
16 Note that bidders can always place electronic bids with companies who give the bidder the
opportunity to “snipe” with a certain amount of seconds left in the auction. This can occur
In addition, one always has the option of bidding against oneself. For
example, say that I really want to win the auction for the hockey jersey.
What I can do is create a “roadblock” as follows: I bid $90.00, again at
$95.00 and finally at $102.73. When an opposing bidder clicks on the
“history” section of the auction, they will see my handle “Davidjosh” as
the leading bidder, with three bids one under the other. Although the value
of each bid is not visible, this pattern suggests to other bidders that they are
going to have to bid high to win, since I am indicating a determined desire
to win at any cost as I am presenting to the competition the need to jump
over three separate bids in order to become the price leader in the auction!
I learned this strategy at a young age when I wanted to win what I thought
to be a golden starfish pin for my mother. She knew that there was going to
be an auction in class, as everyone was told to bring an item of jewelry that
we could bid on. However, she only sent me with a quarter. The bidding
for the starfish began at 7 cents and quickly rose to 18 cents in increments
of a penny with many different kids participating and nibbling. Quickly
realizing that I was about to lose the auction, penny by penny, I screamed
out (“A Quarter!) loudly and clearly, jumping all other bidders by seven
cents and signaling my desire to win the auction at all costs. The result was
that I won the auction for a quarter and my mother loved the story of how I
won better than the item I won. See, auction strategy was in my blood been
as a child, like father like son!
D. Strategizing on Priceline
The concept of “naming your own price” for travel related products should
instantly pique the interest of the consumer, and clearly such a slogan
has helped Priceline become a great success in the United States and the
world. One need only look at the lofty level of their stock price which
has consistently moved in an upward trend. Clearly, in reality, one cannot
name ANY price since the seller has the option to accept or reject your
offer, so the consumer is left to figure out a creative strategy not just to
win, but to win at a price significantly lower than if they were to pay retail.
Priceline started back in 2,000, when travelers could name their price for
at any time of the day. But sniping electronically takes all of the fun out of placing your
finger on the button personally and defeating the competition with one push of a button!
airline tickets, hotel rooms, car rentals and vacation packages. While the
purchaser can select a general location, quality level and price for a hotel
room, rental car company and/or airline, the exact location of the hotel
and the exact flight itinerary is disclosed only after the purchase had gone
through, with no rights to cancel. For those who are less adventurous, this
can be scary, so from a marketing strategy perspective, Priceline appeals to
the segment of consumers who are risk takers.
Focusing on hotel bookings, more recently, Priceline offered an option
where the consumer could purchase the hotel at a higher price than naming
one’s own price, but in this option the hotels were known in advance
(similar to Hotels.com). More recently however, the company developed
the “Express Deal” option where choices are revealed to the consumer at
deep discounts (in terms of the star level rating of quality and area), but the
name of the hotel is only typically revealed if the choice is accepted and
one’s credit card is charged. For example, such a deal would be described
as a 4∗∗∗∗ hotel in Midtown East (New York City) for, say, $189.00.
With all of these ways to purchase a hotel room, the decision regarding
what to do seems almost impossible to solve. But there is a way to avoid
cognitive biases, and even use such biases in your favor when using this
site. Remember this! On Priceline, more is not always better! Now what do
I mean by this?
Did I ever tell you about the time that I got a 4½ star hotel room in
a prime area of New York City for $139.00 a night on Priceline? This
example will detail an effective strategy that you should follow when you
book from this site using hotels as an example. Well, I started out indicating
that I would only accept a five star hotel in Manhattan for the dates I wanted,
and I selected only one designated area of the city that I would accept for the
location of the hotel, specifically “Midtown East” (at this writing, Priceline
has 32 possible areas of New York City that you can select either all at one
time, or individually and sequentially). I bid $115.00 for the hotel room
and was promptly rejected, and my credit card was not charged. I should
note that some people will accept all areas in the city as possible areas
for their hotel location thinking that they have a better chance of getting
a room, under the false cognitive assumption that bigger (more areas) is
better. These individuals usually end up at the airport for a price well in
excess of what they could get on their own by contacting the hotel directly.
The issue here, however, is where the hotel is located and the price paid,
not if one can find a room. Some people may even be ashamed of bidding a
low amount for a room, possibly thinking they might insult William Shatner
or their mother? These people usually also end up at the airport at a rate
higher than could have received if they went directly to the hotel and avoided
Priceline entirely!
Now back to our story, after I had placed my first bid and had been
rejected, I had a dilemma since you must either change your selected dates
for your stay, change your acceptable hotel rating star level or add another
area of the city that is acceptable to you before you can bid again. I had to
decide what to do next and my dates were NOT flexible. I then carefully
selected another area I would entertain as a possible neighborhood that the
hotel could be in (e.g., “Chelsea”) and submitted a bid that was $3 higher
than the prior bid of $115.00 at $118.00. Again, I was rejected. I then did
the same thing adding seven more areas sequentially, with still no luck.
At this point my hand was tired and the bid was up to $136.00. I had
been rejected eight straight times but I had no fear and remained hopeful.
What I did next was a change in strategy. I indicated that I would accept
a 41/2 star hotel in addition to the five-star, and bid $3 higher at $139.00.
I submitted my bid and sure enough Priceline came back with the wonderful
result that “MY HOTEL IS IN THE BAG.” I had won the Waldorf Astoria
for $139.00 ladies and gentlemen. That’s the Waldorf Astoria, not some
hotel in Astoria Queens called the Waldorf. This took patience and an
understanding of how the system works. I will admit, that Priceline is not
for the person who must know in advance where the hotel is going to be
and how many stars it has. The Internet giant is attractive to those who like
to be surprised and those who accept risk. When I tell my friends of my
conquests on Priceline, they always come back with the line: “But you could
have been put into a bad neighborhood,” to which I respond: “How many
5 star hotels do you know in bad neighborhoods?” Thankfully, the answer is
very few.
E. Tickets to the Big Game

I must admit that I am a BIG fan of the Los Angeles Kings. Six years ago
when they won the Stanley Cup for the first time in franchise history, tickets
for the deciding sixth game against the New Jersey Devils were going for
over $1,000 at the last minute. I didn’t have that kind of money so I sat home
with a bottle of champagne and celebrated their victory. However, 2014 was
different. I was armed and ready to deal with the series against the New York
Rangers from two different directions. First, I had saved a little bit of money
each week (approximately $20.00) to put in a fund to buy Stanley Cup
tickets for myself and my two sons. As approximately 100 weeks had passed
since their victory in 2012, I had over $2,000 in the fund. Secondly, I had
read a scholarly article by Ariely and Simonson (2003) which indirectly
addressed the issue of when to buy tickets to the big game.17 In their article,
they examined the pricing of tickets to the 2,000 Rose Bowl game featuring
Stanford against Wisconsin won by the Badgers 17-9. As the playing of the
game approached game time, they found that when tickets were purchased
earlier they went for more money because those who were more interested
in going to the game were likely to bid earlier and were willing to pay higher
prices to ensure that they would have tickets, it was THAT important to them
and of course, they were not risk takers.
So, assuming that the last minute would yield the best price, I waited
until 4 hours before the game started, and a strange thing happened, over
the last 12 hours prior to the start of the game, prices began to rise to levels
that were even higher than those evident 3 days before the big game . . . but
why? The reason is that the number of tickets available for sale rose up to
about 12 hours before the game started. Then, the cheapest tickets available
were scooped up until very few remained, and they were the expensive ones
and doesn’t my wallet feel the pain! The moral of the story is to carefully
monitor ticket prices on the last day of the big game and when the quantity
available begins to decline, then . . . . strike as the price then is likely to rise.
Ziv Carmon and Dan Ariely (2000, p. 360) also discovered that in
relation to tickets for important events (in this case the NCAA “final four”
basketball game) buyers and sellers value the tickets differentially but more
17 Dan Ariely is not only a well-respected scholar, he is also the author of many popular
books inclusive of “Predictably Irrational,” a New York Times best-seller for many weeks.
The Ariely and Simonson reference is Ariely, Dan, and Itamar Simonson. “Buying, bidding,
playing, or competing? Value assessment and decision dynamics in online auctions.” Journal
of Consumer Psychology 13(1) (2003): 113–123.
importantly that the respective valuation is based upon different factors.18

That is, “buyers tend to focus on their sentiment toward what they forgo
(typically, the expenditure) and buying prices are thus heavily influenced
by variables such as salient reference prices, thus price differences not
percentage differences matter.” By the same token, sellers tend to focus
on their sentiment toward surrendering the item, and selling prices are
hence more heavily influenced by variables such as the endowment effect
(as previously discussed) and the benefits of possessing the item. Hence,
buyers should be particularly sensitive to price, and therefore tickets which
have a small differential advantage in price should be highly valued by
the buyer.19 Likewise, the seller suffers from the “Endowment Effect” bias
discussed in Chapter 5. That is, the seller (owner of the item) is most
likely influenced by the perceived value that owing the item conveys to the
bearer, and this effect reflects itself in the fact that the seller often demands
much more to give up the object than they would be willing to pay to
acquire it.
Hence, the strategy that the buyer should pursue in a one-on-one
negotiation with the seller would be to attempt to discount the perceived
value of ownership, weakening the endowment effect. For example, if
the seller is offering Stanley Cup tickets for the Kings, stating a high
price because going to the game is a “once-in-a-lifetime” opportunity,
one can argue back that the Kings won 2 years ago and hence seeing
them win again would happen technically at least “twice-in-a-lifetime,”
and therefore the second championship experience is not as valuable as the
first. I unfortunately had not written this book yet and had therefore not read
it so I bought my tickets on StubHub in an impersonal exchange process,
waiting till the last minute to purchase with the result of “paying through
the nose,” for nose-bleed seats.
18 Carmon, Ziv, and Dan Ariely. “Focusing on the forgone: How value can appear so different
to buyers and sellers.” Journal of Consumer Research 27(3) (2000): 360–370.
19 My tickets to the Kings game cost me $600 a pop! Even at these levels a difference of
$25.00 is still $25.00 especially when all other tickets are all in excess of $600.00. Looking
at this discount as a percentage would make the effect less dramatic since $25.00 is only
1/24th of $600 or approximately 4%. Twenty-five dollars is however 25 dollars any way
you look at it!
Chapter 15
Wrapping It All Up
From the very beginning of this book, we have seen that the consumer can,
at various times, be subject to marketing manipulation, ranging from tactics
taken by the marketer to environmental stimuli, to feelings and exposure
to marketing stimuli one had as a child which now impact decision-
making in the present. At the root of this susceptibility to marketing
manipulation is the consumer’s tendency to utilize System I (or automatic)
processing in decision-making (as discussed in Chapter 1) as well as the
fact that oftentimes, once a decision is made, the consumer tends to follow
the same decision rules resulting in brand loyalty as a consequence of
inertia.
The underlying cause for automatic cognitive processing and inertia
are derived from the fact that the consumer is a “cognitive miser” and tends
to avoid making significant effort in brand choice due to an ever-increasing
complex environment bumping against one’s fixed cognitive resources.1
Consider that System I processing is tailored to avoid cognitive complexity.
That is, it is automatic, fast and often unconscious, with the upside in that
it requires little energy or attention, but with a downside that is prone to
biases and systematic error.
Consider the following example. My dad never failed to play the state
lottery twice every week. He played the game where one chooses 6 numbers
1 Swait, Joffre, and Wiktor Adamowicz. “The influence of task complexity on consumer
choice: A latent class model of decision strategy switching.” Journal of Consumer Research
28(1) (2001): 135–148.
225
out of 49 that are picked, and if one guessed correctly all six, or five of six
of those numbers plus the bonus, one could win millions of dollars. Just for
the record, my father never won more than five dollars, but that’s another
story for another day. One day I asked him how he choose his numbers to
play and he told me that he played the same numbers every time, 02, 11,
17, 22, 26, 52, because those numbers represented both my and his full
birthday. I made the mistake of innocently asking him why he played the
same numbers, since for me that would be somewhat boring. His response
was surprising. He said that in his opinion there are two “moving” parts to
the lottery, the first part are the numbers that he chooses, and the second part
are the numbers that the computer chooses. So, according to his logic, it
would be more difficult to win if he were to constantly change the numbers
that he chose because then there would be “variability” on both sides of the
coin, by keeping his numbers the same, he said that he at least controlled half
of the variability in the game. That is, he thought that if his numbers were to
change, in light of the fact that the computer’s numbers change every week,
his chances to win would be next to nothing. I carefully explained to him that
his chances to win whether he changed his numbers or not were identical
and are indeed next to nothing anyway. This is because the numbers are
chosen randomly and therefore he has absolutely NO control over the result
whether or not he changes his numbers or keeps them the same.
My father, who was a very smart guy and who spent his working life as
a sharp businessman in the role of an auctioneer and appraiser, dismissed
my logic as idiotic, and to keep the peace I told him to continue on with
his approach and of course I wished him bonne chance.2 This example
illustrates both the problem of inertia and that of System I processing.
The fact that my father consistently choose the same numbers to play in the
lottery, in a brand context, represented the fact that many of us think through
our purchase decision the first time we purchase a product in a category.
So for example, when we first choose an airline frequent flyer program to
use, we may consciously consider the available perks offered, how many
2 I actually told him that I would teach him probability theory since I taught Statistics at
the University, but he told me that he had no time for that theoretical stuff, he had to make
money.
Wrapping It All Up 227
miles we have to fly to get those perks, pricing, the convenience of the flight
schedule the airline offers, other companies giving reward miles associated
with that airline, and the closeness of the airport to our home, among other
factors. Then, we typically choose the airline that we want to accumulate
miles on and become somewhat brand loyal to that airline. For my dad, the
analogy would be that he had to consciously choose which numbers to play
in the lottery, the FIRST time he played, then he played the same ones over
and over. The airline is hoping that once you choose their airline, you will
continuously fly them again and again in order to accumulate miles as you
become brand loyal. That is, they are making it harder and harder for you to
switch airlines therefore encouraging inertia (since you are accumulating
rewards as the miles increase), and they are making your decision automatic
(System I) as a light goes off in your head that says “MILEAGE” every
time a chance to fly presents itself whether for business or pleasure. In fact,
the MORE miles you accumulate, the harder it is to switch companies.
So, how does one break out of this never-ending trap of inertia disguised
as brand loyalty and System I (automatic) processing . . .in other words, how
does one escape from becoming part of Zombie World Part I? The answer
lies in actions that YOU, the consumer, must periodically take, but indeed
sometimes events occur that are initiated by the company which force your
hand. Let’s examine the second situation first.
I will admit to you all that I was a United Airlines loyalist, I was guilty of
inertia and System I processing beyond belief! Every credit card that I had
was linked to United’s “Mileage Plus” program, I used a telephone service
that was linked to UA miles, I stayed at hotels that offered miles and even
shopped at a specific store exclusively (Von’s) when they offered 125 United
miles for every $1,000 worth of groceries purchased. I was a United addict.
Now, you might ask if I ever used the miles I accumulated to exchange for
free flights for myself and my family? The answer was yes but begrudgingly,
why begrudgingly? Well, because I took pride in how many miles I
accumulated in my Mileage Plus account, and it was painful to see that
total reduced! I know, I need to make an appointment with a shrink as soon
as possible, but hopefully he/she is affiliated with the United Mileage Plus
program and I can get credit for the thousands of dollars I am about to pay.
Now, one day a couple of years ago, United announced that they had
made the strategic decision to abandon New York’s John F. Kennedy airport
in favor of Newark (which they called New York).3 This decision had a
significant impact upon me because the vast majority of my travel was
between Stony Brook University and Los Angeles where I still live.4 I was
left with the option of flying out of LaGuardia and stopping across the
country in either Denver or Chicago, or driving to New Jersey from Suffolk
County, a drive that could exceed 2.5 hours.5 Guess what? I rejected both
options and for the first time in 20 years did a thorough analysis of which
airline I should give my business to from now on. United’s decision forced
me to break out of my state of inertia and to engage in System II as opposed
to System I processing. I actually created a worksheet which had 9 columns
of different attributes that I considered (e.g., In and out of Kennedy, non-
stop coast-to-coast, convenience of flight schedule, international access,
great frequent flyer program, ability to transfer my 1k Mileage Plus status,
etc.) and 8 rows representing each of the different airlines that I considered
(e.g., American, Delta, Virgin America, Jet Blue, Alaska, etc.). When the
smoke cleared, I chose American because they fit most of my criteria and,
most important of all, accepted my record as a million mile flyer and my
1k status (100,000 miles of flying in the most recent calendar year).
I felt good about making this change even though it was initiated by
circumstances unique to the airline and not by myself. It motivated me to
examine other areas in my life where I am expending lots of dollars while
remaining loyal to brands that I have not changed for years. For example,
when my last of five Honda’s reached the end of the road, I actually opened
up my eyes to considering a different brand, and for the first time purchased
3 As a native New Yorker and Brooklynite, I can personally tell you that New Jersey is not
New York no matter what label you use . . . fuggedaboutit.
4 I might as well add this topic of why I work in New York and live in Los Angeles to my
visit with the shrink.
5 This is the reason that United’s new advertising, attempting to position Newark Liberty as
closer to New York than Kennedy airport is destined for failure. Showing cabs with timers on
their roof showing the exact time to Newark versus Kennedy from that point, is ridiculous.
As one weary traveler commented in response to this campaign, “Putting a half-hour of
time savings on the roof of a cab to show the advantage of going to Newark vs. JFK, is
enough to make me bend over laughing. Traffic conditions in NYC can change in a New
York minute, and the tolls to Jersey are really what kill you, United conveniently leaves
this out.”
a Volkswagen (non-diesel) and have been pleased with the decision.6 We

should all reconsider our loyalties at some point in our purchasing life since
inertia and System I processing can counteract our getting the best offering
on the market.
Making the effort to break the constraints of inertia and to avoid
System I processing can be as simple as changing your purchasing habits.
Consider the situation when you are interested in purchasing a “new”
used car. Most people pick up the newspaper and look into the classified
section to see what cars are available locally at a reasonable price and with
low mileage. However, such an approach is limited both geographically
and in the options considered and is sure to result in a purchase that
is less than optimal. Consider forcing yourself to think through your
typical approach by purposely eliminating the newspaper as a source of
information. Eliminate the newspaper in my search for a used car you say,
are you crazy? No, I’m simply requiring you to break the mold. Consider
the online site “Autotrader.com.” This site allows you to find both used cars
and new cars at a price that YOU can specify and, most importantly, it is
linked to cars available in the entire United States. With the site, you can set
search specifications such as make and model, maximum price, certified,
less than a certain mileage, automatic versus manual among other factors.
In 2013, I used this site to purchase my 2010 Volkswagen Passat Wagon.
Prior to the beginning of the search I told my son David, that we would go
anywhere in America (except Hawaii and Alaska) to purchase the car, if
the deal that was revealed was at least $2,000 less than what we could get
in Los Angeles. What made this approach even more worthwhile was that I
had two free tickets to go anywhere in the United States courtesy of . . . . you
guessed it . . . United Airlines. Hence, what might have been a boring and
unproductive search via the newspaper turned into an exciting adventure
with our destination determined by the results of the computer search.
The “best” car using Auto Trader was found to be offered by Momentum
Volkswagen in Houston. We went there, and the rest is history!
Another way to break the mold is to think more broadly in terms of who
sells used cars. Using our System I “automatic” thinking cap, of course we
6 I bought 5 Honda’s from 1984 until 2013 and presently I own 4 VolksWagons.
first think about private individuals and then used car dealers and car dealers
in general, but if we begin to deliberate on this question and use System II
processing, we realize that those who rent cars also sell cars especially when
they need to welcome in the next year’s model. This event occurs typically
around late August as the New Year model is typically introduced. So, for
my most recent used car purchase, I looked online at Hertz and Avis in late
August of last year for a 2013 Tiguan. Hertz, since it has the reputation of
being the largest rental car service in the world, I suspected would not be
the best place to buy a used car since the car chosen would probably have
been driven by more people than those renting from Avis and hence have
more mileage.7 This turned out to be true, so I purchased my 2013 Tiguan
for approximately $5,000 less than others offered it for from Avis, and it
had 28,878 miles, not too shabby a purchase. In case you are wondering,
the car has stood up to the test of time.
Another example that involves breaking the mold involved a conver-
sation that I had with an eBayer who was selling an 1877 Indian penny in
fine condition. He offered it for sale with a minimum bid of $750.00.8 He
could NOT sell the coin and listed it four times in a row, each for a period
of seven days without success. I contacted him and told him that the reason
he could not sell the coin was because he made it extremely difficult to get
anyone to bid on it. That is, to initially bid on the coin, one had to place
a bid of $750.00. I told him to offer the coin, without a minimum bid and
without a reserve price (i.e., the price that when reached instructs eBay to
sell the coin). His reaction was anger, he told me that I was crazy and that
if he didn’t use the tactic of a minimum bid and a reserve he could end up
selling the coin for a penny, at a tremendous loss!
I explained to him that the chance that the coin would sell for a penny
equaled the chance that Hillary Clinton would appear as a speaker at the
Republican National Convention. To emphasize my advice, I engaged him
on a gamble. I told him that I would guarantee a price of $750.00 if he would
put the coin up for sale with no minimum and no reserve and I promised
7 Some of you may recall Avis’ famous two-sided refutational slogan of “We’re #2 so We
Try Harder.”
8 The coin was actually worth $825 in the condition he was selling it.
him that I would not bid on it so as to rig the results. So, if the coin sold for
$550.00, I would pay him $200.00 to make up the difference. However, if the
coin sold for more than $750.00 he would pay me the difference. He agreed,
the coin sold for $818.67 and I received a check in the mail for $68.67.
Now I tried the same approach when I found a baseball card with the
image of Yoenis Cespedes on the front and the statistical record and name
of Daniel Murphy on the back. I told my wife that this was an incredible
find and that we could retire for life just as soon as I put the card up
for sale on eBay. I carefully took a picture of the front of the card and
the back, set the auction for 10 days and started it off at one penny with
absolutely no reserve. I wrote in the description of the auction that this
was the “FAMOUS” Cespedes/Murphy error card, but I had no idea if this
card was valuable or if the Topps Company had mistakenly issued many of
them. I couldn’t wait to see the price rise and rise in the auction. Well, guess
what, I received a first bid of a penny, 3 minutes after I listed the auction and
despite looking at the auction over 200 times, the final bid . . . . . remained
at a penny. In my email to the winner, I told him not to pay and that I would
spring for the free stamp. So, when my wife asked me where we were
going to retire with the proceeds of the auction, I told her I didn’t even
make enough money for us to buy a tent so that we could sleep on the
streets, or for that matter, the anchors to pitch the tent.
So what was the difference between selling the Indian penny with no
minimum and no reserve versus the Cespedes/Murphy error card? The
difference is that there is a strong market among coin collectors for the
1877 Indian penny. Hence, selling it without a reserve or a minimum bid is
not risky because on eBay, given the number of participants on the auction
site, the final price should reach the market price. However for the baseball
card, this was an undefined entity in terms of value and hence if it was NOT
in demand, it could sell for one penny, as it did. So the lesson is, if you are
going to sell an item without any protection in the form of a minimum bid
or a reserve price, make sure that the item has a defined market. If it does
not, you may sell it for a lot less than it is worth, or at least a lot less than
you expect.
So in closing, the best way to avoid marketing manipulation is to
anticipate that you could become a victim if you are not engaged in what’s
happening around you. While thinking automatically has the advantage of
simplifying your life, it also sets you up to mindless behavior which sets
course directly into dangerous waters (or knee deep in soup). Consider
Brian Wansink’s research on mindless eating behavior. In one experiment
where subjects were asked to consume as much soup as they wanted, those
who were given self-refilling soup bowls that filled secretly as they ate,
consumed 73% more soup relative to those subjects exposed to regular soup
bowls. Surprisingly, the former group reported that they did not believe that
they had consumed more soup than the other group nor did they report that
they were more sated than those who had eaten from normal bowls.9 As
perception becomes one’s reality, remove the automatic controls on your
behavior so that marketing manipulation does not become your reality, and
you do not end up in the soup.
9 Wansink, Brian, James E. Painter, and Jill North. “Bottomless bowls: Why visual cues of
portion size may influence intake.” Obesity Research 13(1) (2005): 93–100.
Index
A attack ad, 50
A1C , 127 attribution theory, 66
a fear appeal, 78 automatic processing, 25
A Million Ways to Die in the West, 77 Autotrader.com, 229
ABC, 145 availability heuristic, 11, 72
Academy Award, 211 Avengers, 151
adaptation-level theory, 103 Avis, 200, 230
advertising, 1–3, 8–10
advertorial, 203, 206 B
affect, 180 Baader–Meinhof Effect, 47
affective, 5 bachelor, 37
Agida, 66
bachelorette, 37
Alamo, 200
Bait and Switch, 146
Alaska, 228
ball point pen, 64
Alfa Romeo Spider, 201
bandwagon effect, 32, 219
Allergan, 159–160, 162, 173
Barcelona, 71
Alpert, Eddie, 137
Barnes and Noble, 210
Amazon, 197
American Pickers, 165 barriers to entry, 88
American University, 93 Barrons, 103
AMTRAK, 93 base rate, 36
anchoring, 27, 102 base rate fallacy, 34
anchoring effect, 27–28 Batman, 145
And That’s Not All Technique, 101 BBB, 148
Anheuser-Busch, 106 Belt Parkway, 116
Animal House, 54 Belushi, John, 54
Ardennes, 203 Bernard M. Baruch College, 4
Ariely, Dan, 20, 97 Belushi, John, 54
Asch, Solomon, 192 Better than Botox, 159, 173
Assael, Henry, 64, 85 Beverly Hills, 159–160
Ativan, 203 binge eating, 49
Atlantic, 206 Black Hole Bias, 45
233
234 Index
Blackett, Tom, 131 Carson, Ben, 179

Blanton Manufacturing, 164 category prototype, 76
blurring, 119 Caterpillar, 200
BMW 5 series, 43 CBS News Healthwatch, 124
BOGO, 100, 147–148 CDC, 127
Bond, James, 102, 201 Celebrex, 129
Botox, 159–161 Celexa, 129
Botox Cosmetic, 159, 161–162 cereal, 62
brand, 117–118, 163 Cespedes, Yoenis, 231
brand loyal, 38, 164, 225, 227 Chasing Tail, 165
brand name, 76, 108, 128–129, 164 Chelsea, 222
branding, 112 China, 149
Brexit, 191, 194 Chiquita Banana, 2
Brilinta, 129 choice behavior, 199
Brintellix, 129 Chrisdien Deny, 113
Britain, 191 Christian Dior, 113, 115
British Pound, 43 Christian Mingle, 60
Broadway, 105 chroma, 17, 201
Brooklyn, 116 chunking, 164
Brooklyn Nets, 104 Cialis, 128
Brown, Gordon, 186–187 Cinque Terra, 168
Buchanan, Bruce, 156 Claritin, 130
Bud-Light, 69 class action, 12, 167
Budweiser, 106–107 class action lawsuit, 157
Buffalo Nickel, 140, 218 Clippers, 55
Bumble Bee, 63 Clinton, Hillary, 50
bundle, 19, 98–99 Clooney, George, 66, 97
Burger King, 2 Clostridium botulinum, 160
Buy It Now, 41, 213 Clostridium difficile, 129
Bynes, Amanda, 90 CNBC, 210
CNN, 31, 179–180, 182
C Coaster Boy, 91
2005 Congressional Record, 181 Coca-Cola, 63, 76, 109, 117
Cairo museum, 130 Cochran, Johnnie, 53
California, 112, 125, 194 cognition, 71, 80, 82, 125, 180
calorie content, 108 cognitive, 4–5
Calvin Klein, 19, 147 cognitive bias, 11, 23, 27
Cambridge University, 143 cognitive dissonance, 48, 146
Cameron, David, 191, 194 cognitive effort, 21, 85
Campbell’s soup, 76 cognitive mechanisms, 25
Canada Goose, 115 cognitive miser, 86, 94, 96, 225
Cancún, 104 cognitive resources, 103
Captain Crunch, 2 Corzine, Jeff, 187
Captain Jack Sparrow, 123 Coke, 117
Cardio-Scan, 34–35 Colgate, 76
Index 235
color, 128, 199–200 direct selling, 99

Cooper, Anderson, 179 Direct-to-Consumer (DTC), 124, 128,
comparative advertising, 108 162
Conan the Barbarian, 69 Docusate, 129
confidence, 58 Dooney & Bourke, 110
confirmation bias, 36, 47, 139 Draft Day, 211
Connecticut, 112 durability, 170
consumer, 16
consumer behavior, 85 E
consumer biases, 11 e-commerce, 72
consumer confusion, 110 Eagle, Angela, 191
consumer reports, 65 Eastwood, Clint, 77
consumption behavior, 48 eBay, 6, 13, 32, 34, 40, 43, 50, 58, 72–74,
consumption patterns, 38 88–89, 121, 150, 209, 212–214,
contrast, 168, 181 216–219, 231
Corbyn, Jeremy, 191 egocentric bias, 72–73
Cordoba, 71 emotions, 4–5
Corona, 200 endocrinologists, 89
Costner, Kevin, 211 endowment effect, 39–40, 48, 224
country-of-origin, 106, 108, 149 entry barriers, 76
Cramer, Jim, 67 equal, 200
Creamo, 163 Escalation of Commitment, 43
Crisco Shortening, 76 Europe, 191
Cruz, Ted, 185 European Union, 191–192
Cruz, Penelope, 65 Exubera, 89
cue, 16–17, 49, 149, 217 F
fading affect bias, 74–75
D
fair price, 104
Daily News, 145 false advertising, 153
Dangerfield, Rodney, 130 false advertising claims, 156
Dartmouth, 101, 143 false and deceptive advertising, 173
Dartmouth College, 54 false consensus effect, 58–59
death tax, 42 false negative, 34
deception, 154–155 false positive, 34
deceptive advertising claims, Fantastic Four, 151
159 fat content, 108
decision process, 13 Ferrari, 200–201
decision-making, 4–5, 7, 11, 13–14 Fiat, 195–196
Decker, Brooklyn, 198 final four, 223
degenerative myelopathy, 44 Firestone Tire Company, 111–112
Delta, 228 First-Mover Advantage, 76
Democrats, 181 Fishburne, Laurence, 136
denomination effect, 38–39 Flonase, 130
diabetes, 45, 126 Florence, 168
dilution, 118 focal item, 99
236 Index
Fonz, 41 Harvard Business Review, 45

Food and Drug Administration (FDA), 7, Hawaii, 125
89–90, 124, 127, 161–162 Hebrew University, 5, 185, 217
Ford, 111–112 Heineken, 200
Ford Explorer, 111–112 Heraldic lion, 143
Fort Knox, 119 herd behavior bias, 32, 219
Fox, 179–180 Hertz, 200, 230
frame, 165 heuristic, 13, 21, 32, 53, 86, 118
frame of reference, 46 Hi-C, 198
framing, 75, 170, 203 Hierarchy of Effects, 80, 180
framing effect, 41–42, 71 high chroma, 166–167, 202
France, 113, 140 history, 194, 220
franchising, 99 History Channel, 165–166
Freeman, Morgan, 77 Hitler, Adolf, 175
Friendly Frost, 145 Hill, Jonah, 211
Frontline interview, 41 Hobble-Skirt, 117
Frosted Flakes, 2 hockey jersey, 218–219
FTC, 15, 206 Hoffman, Dustin, 93
Holbrook, Morris, 80
G Hollywood Bowl, 49
Gardner, Meryl, 80 Honda, 38
Garner, Jennifer, 211 Houdin, Robert, 57
GE, 145–146 Houdini, Harry, 57
Geico, 79–80 Houston, 229
GERD, 125 How the West Was Won, 165
Germany, 107 hue, 200–201
Gershwin, George, 49 H&M, 197
Gestalt psychology, 82
Gettysburg, 176 I
glabellar lines, 161 identification, 55
Glaxo-Smith Kline, 130 Illinois, 112
Gleason, Jackie, 116 illusionary superiority, 60
Goldman, Doron, 156 illusory superiority, 61
Graham, Lindsay, 184 immunize, 9
Great Pyramid, 130 Inbev, 106
Green Eggs and Ham, 185 Indian pennies, 73, 215, 231
Grenada, 71 inertia, 85, 89, 225–227
inoculate, 29
H inoculation theory, 170
Hackman, Gene, 77 insulin, 89–90
halal, 63 Intelius, 166
Hamburger Helper, 129 interior department, 163
Hanover New Hampshire, 101 international branding, 112
Harrison, Rick, 40 Investor’s Business Daily, 45, 86,
Harvard, 143 176
Index 237
involvement, 85 Kotler, Phillip, 128

iPhone, 168 Kotler and Keller, 128
isolation effect, 80 Kubota, 200
Israeli Shekel, 42
Ivory soap, 76 L
Ivy league, 143 LaBatt, 200
Labour Party, 191
J LaCoste, 118
21 Jump Street, 211 Lafayette College, 53
22 Jump Street, 211 Lake Wobegon, 61
J-Date, 60 Lake Wobegon Effect, 60
Jackson, Michael, 160 Lancôme, 148
Jacoby, Jacob, 82 Lanham Act, 110, 112, 153
Jenner, Bruce, 109 Las Vegas, 74, 202
Jenner, Caitlyn, 79 Last Act price, 29
Jet Blue, 228 Lauren, Ralph, 19, 172
Jewish, 63 Lawrence of Arabia, 165
Jewish dietary law, 62 learning theory, 49
John Deere, 200 Lee, Harper, 150
John F. Kennedy airport, 227 Lemmon, Jack, 211
Johnnie Walker, 114 Levitra, 203
Johnson, Lyndon B. (see also President Levitt, Ted, 102
Johnson), 43, 104 Lewis, Jerry, 105
Lewis, Michael, 210
K Lindell, Mike, 147
Kamins, Michael, 217 Loews Theaters, 156
Kardashian, Kim, 78, 173 Lorillard, 156
Kraft Macaroni and Cheese, 118 Los Angeles, 55, 74–75, 96, 228
Kashi, 61–63 Los Angeles Kings, 91, 222, 224
kashrut, 62 loser’s curse, 212–213
Keat’s heuristic, 53 Louis Vuitton, 110
Keller, Helen, 113–114 low involvement, 17–18
Keller, Kevin Lane, 128 Luntz, Frank, 180
Kellogg’s Corn Flakes, 76
Kelloggs, 1 M
Kennedy, John, F. (see also President MacFarlane, Seth, 77
Kennedy), 43, 182, 228 MacLaine, Shirley, 211
Keytruda, 129 Macy’s, 147
Kill A Mockingbird, 150 Mad Money, 67
Klein Becker, 159 Madison Square Garden, 104
Klein, Arnold, 160 Madrid, 71
Kohler, Wolfgang, 80 Manhattan, 221
Kona, 74 Mann, Alfred, 90
Kors, Michael, 19 MannKind, 90–91, 209
kosher, 61–64 market leaders, 32
238 Index
market leadership, 33 My Pillow, 147–148

marketing, 85 M&M’s, 105
marketing manipulation, 13–14
marketing maven, 65, 73 N
marketing mix, 10 naïve theories, 22
marketing tactics, 13 naive belief, 21, 33
Maserati, 168 National Diabetes Fact Sheet, 89
Mason, Jackie, 80 Naples, 168
Match.com, 60 Nasonex, 130
materiality, 154 National, 200
Matsuyama, Brad, 210 NBC Business News, 156
maximum bid, 212 NCAA, 223
negative option pricing, 17, 167
Mays, Billy, 100
negativity bias, 49, 51, 72, 88
Mazursky, David, 185, 217
Nelson, Willie, 90
McConnell, J. Douglas, 107
New Jersey, 152, 187
McDonalds, 98, 187
New Mexico, 123
McGuire, William, 170 New York, 115, 196, 228
Medavoy, Irena, 161 New York City, 93, 221
memory, 72 New York Daily News, 176
memory biases, 210 New York Knicks, 104
memory-based biases, 13 New York Rangers, 146, 223
Merck, 130 New York State Attorney General, 173
mere exposure effect, 8, 48 New York Stock Exchange (NYSE), 210
minimization, 74 New York Times, 60, 93, 114–115, 161,
minimization hypothesis, 74 187
minimum bid, 214, 230 New York University, 156, 169, 197
Minute Maid, 109 Newark, 152, 228
MIT, 97 Nexium, 124
mobilization, 74 nibbler, 218
nibbling, 220
model, 49
NIH, 127
Molokai, 202
Nissan, 102
Money Monster, 67
Noy, Avi, 217
more the better bias, 12 numismatist, 215
mortality salience, 52
Morwitz, Vicky, 197 O
mouse, 160
O’Brien, William, 210
MSNBC, 179–180 Obama, Barack, 182
MSRP, 105 odd-pricing, 94, 96
multi-level marketing, 99 odd-pricing effect, 94
Murakami, 110 Oklahoma City, 181
Murphy, Daniel, 231 Olympic Decathlon, 109
Mutombo, Dikembe, 79 one-sided, 167
Mutual of Omaha, 120–121 O’Neill, William, 45
Index 239
order, 166 Prilosec, 124

Ortega, 63 primacy and recency effect, 76
Orthodox Union of Rabbi’s, 64 primacy effect, 76, 192–193
out-group homogeneity bias, 61, 63 Princeton, 54, 143
Princeton University, 54
P processing, 16
packaging, 128 product, 92
Palin, Sarah, 176 prominence effect, 80
Paris, 140 promotion, 92
Parke–Davis, 126 prospect theory, 101
Patent Office, 163 psychology, 27
Patton, George, 165 puffery, 157
Paul, Les, 40 Pulitzer prize, 176
Pawn Stars, 40–41, 165 pump and dump, 59
Peace Corps, 51 purchase, 180
pennies a day, 103 purchase intention, 193
People Search, 166 purple pill, 124
Perkins, Marlin, 120 pyrazinamide, 129
perceived risk, 106
Q
perceptions, 16
peripheral, 17 quality, 149, 170
Personal Post, 81
Personal Post Office, 81 R
Pesci, Joe, 70–71 R.J. Reynolds Tobacco Company, 156
Pfizer, 90, 126 Radio Flyer company, 91
Pfizer Corporation, 89 Raisin Bran, 62
Phase I, 7 Ramirez, Michael, 176
Phelps, Michael, 90 rational man, 32, 217
pioneer brands, 32, 76 reactance, 52
Pitney Bowes, 81 reasonable consumer, 158
Pitt, Brad, 97 recency, 77
Place (distribution), 92 reciprocity bias, 141
Popeil, Ron, 100 rectangular distribution, 162
Post, 62 Red Bull, 156–157
Post Raisin Bran, 62 Reese’s Dark Chocolate Peanut Butter
Prevagen, 158 Cups, 45
price, 92 Reese’s Peanut Butter Cups, 45
price anchoring, 101 reference point, 103
price anchors, 214 reference price, 103, 105
price bundling, 18 Rembrandt Company, 152
price lining, 149 Republicans, 50, 180–181, 184
price sensitivity, 108 reserve price, 214, 218, 230
price–quality, 108 Reuters, 210
price/quality inference, 108 Rezulin, 125–128
priceline, 72–74, 209, 220, 222 Rhapsody in Blue, 49
240 Index
Rhyme-as-Reason Effect, 52 Snickers bar, 71

Rickles, Don, 71 sniper, 218
Robins, Rebecca, 131 sniping, 216–217
Roosevelt, Eleanor, 178 social acceptance, 22
Rolling Stone, 115 social biases, 14, 55
Rome, 75, 168 social cues, 217
Ronald McDonald, 2 social psychology, 27
Roosevelt, Franklin, 175 social security number, 28
Roosevelt Island, 178 sociology, 27
Rorschach test, 65 Sorrento, 168
Rotarian, 206 Southern California, 65, 172
Spain, 71
S Spiderman, 151
Salem Cigarette, 83 Spirit Air, 74
Sanders, Bernie, 179 Splenda, 200
schema, 70 sponsored content, 206
schema incongruence effect, 69 spotlight effect, 78
Schindler, Robert, 95 Stanford, 58
Schneiderman, Eric, 142 Stanford Research Institute, 107
Schul, Yaacov, 185 Stanley Cup, 223–224
Schwarzenegger, Arnold, 69–70, 154 Staples Center, 91
Seawolf red, 200 Star Alliance, 75
secondary meaning, 114–116 Starbucks, 200
See’s Candies, 63 Steinhart, Yael, 217
selective attention, 47 Sterling, Donald, 55
selective perception, 54 Stern School, 156
self-serving, 65–66 Stony Brook, 3
self-serving bias, 64 Stony Brook University, 1, 106, 200, 228
serial positioning, 166 Strivectin, 159, 173
series, 43 StubHub, 209
setting your reserve, 44 Suffolk County, 102
Seville, 71 sunk cost effect, 46
Sex in the Ancient World — Pompeii, 165 sunk cost fallacy, 44, 145
Shamban, Ava T., 159 SUNY, 32
Shanghai, 113 Super Bowl, 69
shape, 128 supplemental item, 99
Shatner, William, 222 Supreme Court, 164
Sheepshead Bay, Brooklyn, 158 Sweet’N’ Low, 200
sided advertising, 169 Swiss–Webster mice, 160
silver dollar, 140 Sylvania, 146
simple heuristic, 108 System I, 13–14, 16, 25, 41, 118, 144,
Simpson, O.J., 53 166, 173, 225, 227–229
Skechers, 173 System I processing, 17, 20–21, 226
sleeper effect, 185–187 System II, 13–14, 41, 228
Snickers, 70–71, 116–117 System II processing, 23, 25, 230
Index 241
T Unforgiven, 77
Talon zippers, 78 United Airline, 49, 227, 229
tarnishment, 119–120 United Kingdom, 191
Tatum, Channing, 211 United States, 229
Taylor, Elizabeth, 160 United States Department of Agriculture,
telemarketing, 9 163
Terminator, 69 United States Senate, 185
Texas, 112 United’s Mileage Plus program, 86
Thaler, Richard, 215 University at Buffalo, 32
The Apartment, 211 University of California-Santa Cruz, 213
The Apprentice, 180 University of Chicago, 95, 215
The Guardian, 191 University of Nebraska, 60
The Internship, 211 University of Southern California, 38, 53,
thermoregulation, 5 200, 214
Theron, Charlize, 77
Third Reich, 203 V
Tiguan, 230 value, 201
Toledo, 71 Vaughn, Vince, 211
Tony the Tiger, 2 Verne, Jules, 40
Topps Company, 231 Viagra, 128, 203
Toucan Sam, 2 Victor’s Little Secret, 119
trade dress, 113–115 Victoria’s Secret, 119
trademark, 118 Victoria’s Secret Angels, 120
trademark dilution, 119 Virgin America, 228
transaction compliance, 103 Voight, Jon, 93
TripAdvisor, 50, 64–65 Volkswagen, 102, 170
Triumph cigarettes, 156 Von Restorff, Hedwig, 80
Tropicana, 2, 109 Von Restorff Effect, 79
Troy-Hills New Jersey, 159
True Lies, 154 W
Trump University, 141–143 Waldorf Astoria, 222
Trump, Donald (see also President Walker, Morton, 135
Trump), 50, 141–142, 176, 179, 184 Wansink, Brian, 232
TSA, 93 Wall Street Journal, 103
Twilight movies, 77 Warren, Lori, 95
two-sided, 169, 172 warmth, 5–6
two-sided non-refutational appeal, 172 Warner Lambert, 126
two-sided refutational ads, 170 Washington, D.C., 93, 167
two-sided, advertising, 168 Washington Heights, 145
Type I error, 34 Weiner, Anthony, 193
Type II, 34 Weiss, Leopold, 57
Wesleyan Media Project, 182
U Wharton School, 143, 197
U.S. dollar, 43 “wheat backed” cents, 40
UCLA, 200 Wild Kingdom, 120
242 Index
Wilderness AT tire, 112 Y

Williams, Andy, 145 Yahoo auctions, 89
Wilson, Owen, 211 Yale, 143
winner’s curse, 44, 212, 215, 219 YouTube, 210
Winston Lights, 156
wisdom of the masses, 33 Z
Wisk, 78–79
Zajonc, 198
word-of-mouth, 129
Zeigarnik, Bluma, 83, 210
Wrigley’s chewing gum, 76
Zeigarnik effect, 80–82, 145
Zuni Indians, 123
X
Zwicky, Arnold, 47
X-Men, 151
Xyzal, 130
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The World Scientific–Now Publishers Series in Business publishes advanced text-

Vol. 14 Marketing Manipulation: A Consumer’s Survival Manual

Vol. 13 Project Risk Analysis Made Ridiculously Simple

Vol. 12 Real Options in Energy and Commodity Markets

Vol. 11 Global Sourcing of Services: Strategies, Issues and Challenges

Vol. 10 Cross-Functional Inventory Research

Innovative Federal Reserve Policies During the Great Financial Crisis

Marketing for Economists and Life Scientists: Viewing Marketing Tools as

The complete list of titles in the series can be found at

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Michael A. Kamins is currently a Professor of Marketing at the Peter F.

About the Author v

Chapter 1. The Impact of the Marketing Environment 1

Chapter 2. System I Processing 15

Chapter 3. Cognitive Biases and System II Processing 25

Chapter 4. Social Biases 57

Chapter 5. Memory Biases 69

Chapter 6. The Problem of Inertia 85

Chapter 7. Price and Its Influence Upon Choice 93

Chapter 8. Deceptive Products: Consumer Confusion,

Chapter 9. Marketing Manipulation by the Drug

Chapter 11. Deceptive Advertising and Promotional

Chapter 12. Political Advertising and Deception 175

Chapter 13. Manipulative Marketing Research from

Chapter 14. Winning Strategies for Online Purchases

Chapter 15. Wrapping It All Up 225

The Impact of the Marketing Environment

3 Milliman, Ronald E. “Using background music to affect the behavior of supermarket

physical warmth leads to social warmth and appreciation of others,7 and

opinions being given greater weight in decision-making.9 This research

12 Zajonc, Robert B. “Attitudinal effects of mere exposure.” Journal of Personality and

However, before we disembark on a thorough discussion of these

determine how important various attributes of a product are in triggering

Now, without any idea regarding how to evaluate which brand of

as being governed by two cognitive systems: automated rules or heuristics

But what caused the deception? Well, to be honest, I actually deceived

1 Kahneman, Daniel. “Maps of bounded rationality: A perspective on intuitive judgment and

price. However, if one clicks on the button, they could be immediately

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Cognitive Biases and System II Processing

B. The “Anchoring Effect”

2 Simonson, Itamar, and Aimee Drolet. “Anchoring effects on consumers’ willingness-to-

FIGURE 1: Suggestive Check

D. The Bandwagon Effect (Herd Behavior Bias)

E. Base Rate Fallacy

F. Choice Supportive or Confirmation Bias

14 Mather, Mara, Eldar Shafir, and Marcia K. Johnson. “Misremembrance of options

G. The Denomination Effect

H. The Endowment Effect

I. The Framing Effect (“Money Illusion for Currency”)

marketing research through carefully examining how people react to various

K. Sunk Cost Fallacy

a survey in a Colorado ski town, exposing 50 skiers each to one of two

M. “Mere Exposure Effect”

the findings of a Canadian researcher who observed that university students