Priceless: The Myth of Fair Value (and How to Take Advantage of It) Read Online Free PDF

convinced.
    A nondisclosure agreement prevented Hoffman from publishing or even talking about his findings. The building developer did not want anything that could be construed as adverse publicity. The Oregon tests did cause the engineers to adopt stiffer exterior columns. The buildingopened to great fanfare in 1970 as the World Trade Center. Thirty-one years later, two hijacked jetliners crashed into the center’s twin towers. Hoffman’s recommendations are credited with keeping the towers standing long enough for more than 14,000 people to escape to safety.
     
    Today the Oregon Research Institute (ORI) is revered as a cradle of behavioral decision theory. ORI was the longtime professional home of Sarah Lichtenstein and Paul Slovic, the first to demonstrate clearly just how clueless people are about prices and decisions based on them. For one productive year, ORI was also home to Amos Tversky and Daniel Kahneman, perhaps the most influential psychologists of their age.
    Before getting to this illustrious group, it’s necessary to say something about their predecessors, and about the peculiar science of psychophysics.
    Well into the twentieth century, psychologists had a case of physics envy. There was agonizing over whether psychology was a science at all. In a quest to make their field more quantitative, psychologists collected reams of numbers. What they were going to do with these numbers was not always clear. No one epitomized this epoch better than Stanley Smith Stevens—“S. S. Stevens” in his publications and “Smitty” to just about everyone.
    Stevens (1906–1973) grew up among a gaggle of cousins in a polygamous Mormon household in Logan, Utah. Upon coming of age, he was packed off as a missionary to Belgium. There he labored under the handicap of not speaking the languages of the heathens he was attempting to convert. His subsequent academic career took him from the University of Utah to Stanford to Harvard. Stevens’s psychology Ph.D. was awarded, per Harvard custom of the time, by the Department of Philosophy.
    War made Stevens’s reputation. At the behest of the U.S. Air Force, he founded the Psycho-Acoustic Laboratory in 1940. Its location, the basement of Harvard’s neogothic Memorial Hall, belied its somewhat incredible mission: to study the effects of extremely loud noises on pilots. Experimental subjects listened to deafening 115-decibel blasts for seven hours a day. Stevens found that the noise did not impair mental performance too much. The main problem was that nobody could hear what anyone else was saying. Stevens’s lab took on the task of designing intercoms for noisy cockpits.
    Stevens retained a gruff military manner throughout his career. As one colleague recalled,
I was directed to Dr. Stevens’s office and found him in what I came later to recognize as a characteristic posture, legs extended, ankles crossed, feet on corner of desk. As he sat up and turned to greet me I saw a handsome man in his mid-thirties, tall and muscular, round-shouldered with long arms and large hands, a 4-4-4 on the somatotype scales; a long face with a high forehead and excellent features; wavy black hair and a natty moustache; an open, level gaze and an expression that in repose seemed sad, even disapproving, but could break into an irresistibly winning smile . . . In appearance he could have been a matinee idol, but the idea of S. S. Stevens as an actor would strike anyone who knew him as absurd. He could never have spoken lines from another’s script. He was his own man, if ever anyone was. I did not actually join the laboratory until eighteen months later; by then I had learned that my first impression was only one side of a very complex personality. Stevens was a primitive—he had in him the force of Nature.
    One name “Smitty” Stevens wasn’t so keen on being called was “psychologist.” He spent his career fretting about the unscientific bunkum, as he saw it, perpetuated under that name. A