Optimality in Economic Science: Price-Placebo Effect

Washington Post, March 17, 2008 Page A3 apropos of Medial orbitofrontal Cortex:

This part of the brain makes judgments about pleasure, and intriguing new research has found that the price people pay for something can subtly and unconsciously change how much pleasure they derive from it." Baba Shiv, a Stanford University behavioral economist, who was part of a team of researchers who studied the medial orbitofrontal cortex. Along with California Institute of Technology neuro-economist Antoniio Rangel and others, Shiv had people evaluate two bottles of wine, priced at $10 and $90. What the volunteers did not realize was that the wine in the expensive and cheap bottles was the same. The expensive wine was better merely because they figured it ought to be better. My comment: It is a matter of perception and reception with the personal attitude to glorify price. Such mindset or state of mind may be applied to Sino-American Economics e.g. An American lives in China for a simple lifestyle versus a Chinese with high-roller living in USA. Such circumstances may be labeled as "Price-Placebo Parity" as I would ponder and reflect with the utility effect of price-placebo parity.

Francis Shieh a.k.a. Xie Shihao, an indefatigable student in the field of economics. March 17, 2008 at 9.30 p.m.