Choiceology with Katy Milkman
Cents & Sensibility: With Guests Melina Palmer & Devin Pope
May 19, 2025
In this engaging discussion, Devin Pope, a Steven G. Rothmeier Professor at the Booth School of Business, reveals how cognitive biases shape our economic decisions. He explores intriguing concepts like left digit bias, showing why we might pay more for a car that has 29,999 miles instead of 30,000. The conversation includes fascinating insights into pricing strategies in music, diamonds, and even medical decisions, emphasizing how numbers significantly influence our choices in surprising ways.
32:49
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Quick takeaways
- The left digit bias significantly influences consumer purchasing decisions, as seen in pricing strategies like Apple's 99-cent songs, enhancing perceived value.
- This bias extends into healthcare, where patients’ treatment recommendations can vary based on age thresholds, highlighting potential inequities in medical care.
Deep dives
The Birth of the 99 Cents Only Store
David Gold's entrepreneurial journey began in Cleveland, Ohio, where he helped his parents run a general store before moving to Los Angeles. By the age of 30, he was managing the family liquor store and discovered that pricing items at 99 cents encouraged sales, particularly with slower-selling wines. This insight led him to create the 99 Cents Only Store, which opened in 1982 and quickly gained popularity, resulting in multiple locations within a few years. Although pricing everything at 99 cents proved successful initially, rising inflation forced the company to close eventually, but at its peak, it operated over 300 stores across several states.
