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How Amazon.com and the Kindle Employ Psychology To Nudge Us

William Poundstone, author of the great book, Priceless: The Myth of Fair Value, points out how Amazon.com and the Kindle use psychology to nudge us…

Charm prices. These are prices ending in 9, which often have an uncanny motivating effect on consumers debating whether to buy. Amazon's eBook price is a super-charming $9.99.

Advertised reference prices. Amazon quotes a “digital list price” of $12.99. The “What's this?” button informs the curious shopper that “Digital List Price is the suggested retail price set by the publisher.” But you don't pay that; instead, the “digital list price” presents an appealing contrast to Amazon's lower price. Lest anyone miss the point, Amazon crosses out the digital list price and gives the discount in dollars and in percent (computed from the not-so-comparable list price of the hardcover book, $26.99).

Free.” You're just a mouse click away from sampling the book for free.

Don't wrap all the Christmas presents in one box.” Coined by economist Richard Thaler, this dictum holds that a product's benefits should be enumerated rather than lumped together. Consumers are more likely to buy a Swiss Army knife than a penknife, all things being equal. Thaler's rule is practically the gospel of infomericals. So, if you buy Priceless now, we'll not only send you a fantastic book… we'll throw in “wireless delivery via Amazon Whispernet”… plus, it's “text to speech enabled”!

If you want to be more aware of how companies are nudging you then buy the book and read it.