8:45 - 10:00
Pre-Conference Workshop: The Irrational Ways Humans Respond to Prices and Packaging
Dr. Wei Ke
Strategy and Methodology Expert in Pricing, Marketing, and Operations, Simon-Kucher & Partners
Wei-Ke, who received his PhD in Decision Risk & Operations from Columbia Business School, can share examples and explain why we respond irrationally, and end-up paying more for goods and services.
For example, borrowers responded equally to an offer for a $50,000 loan with an up-front fee of $100 compared to the same loan with an up-front fee of 130 basis points, eventhough the first offer costs less ($100 versus $650). Borrowers were psychologically biased against the first because we are sensitive to a dollar sign, and less sensitive to an abstract term like bps. In another example, the lowering of the cost
of a Home Equity Line of Credit (HELOCS) actually encouraged higher usage, and resulted in higher profits for the bank. Here is a video of Wei Ke presenting more examples including how Disney de-sensitizes its theme-park visitors to high prices.