Human Psychology is Behind the Success of Premium Prices
According to Chicago Booth’s Alex Imas and London School of Economics’ Kristóf Madarász people are ready to pay premium prices of 50% and sometimes even more for the idea of exclusivity. Premium prices on luxury cars, liquors, and fashion are met purely because not everyone can have it, says their research. It reflects a deep-seated aspect of human nature where we put a greater value on things that other people want but can’t have, just because they can’t have them.
While this might sound like a negative personality trait, Imas says it is not intentional. It is a subconscious desire to have something that others want.To come to this conclusion, the researchers developed a theoretical framework and conducted two experiments involving almost 400 participants to explore the impact and value of exclusion and exclusivity.
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