The Dan Ariely Series: Power of Price

In Dan Ariely’s book Predictably Irrational, the famous Veladone RX experiments conducted on a college campus vividly exposes our bias to the power of price when participants of the experiment were able to withstand more pain from electric shocks taking the full-priced painkiller than those that took the discounted cheap painkiller pill.

Although we later learn that both painkillers were placebos (vitamin C), we wanted to dive into the power of price and how that affects our social decisions when making purchases that have to do with health.

In Ghana, it is not uncommon that a member of my family has malaria from time to time. A friend of mine,

ACTm Artefan Ghc5 or $1.10

Basha the pharmacist, tells me there’s an alternative to the more expensive anti-malarial Coartem 3-day course by Novartis which generally costs anywhere from Ghc35 – Ghc39 equiv. $8-$9. The alternative referred to as ACT Artefan is subsidized and costs roughly $1 or Ghc5.

My understanding from Bendi, another pharmacist friend, is that pharmacies only pay the shipping of the product and Bill Gates pays the rest. Regardless what the truth behind the subsidizing authority or body, there’s an 8x price difference.

The BIG Question is: Which anti-malarial  will you buy for your sick daughter or son or spouse? Not only are they weak in bed shivering from fever with sweat dripping from their forehead, but also too weak to move or eat or drink.

Will you go for the discounted ACT or will you ask for the original fully-priced 3-day course and more expensive drug, yet we know they’re the same. Many of us go for the expensive option.

Dan Ariely is the James B. Duke Professor of Psychology and Behavioral Economics at Duke and a founding member of the Center for Advanced Hindsight. Dan’s books, Predictably Irrational, The Upside of Irrationality, The Honest Truth About Dishonesty, are NY Times best sellers. Dan also has a podcast “Arming the Donkeys”. A new book by Dan and Jeff Kreisler is expected to go on sale November 11 2017 titled Dollars and Sense.

 

Professor John Sutton and the Enterprise Map Series

Enterprise Map Series – An Excellent Primer

Elmina
View from Elmina Castle

In my opinion, one of the current challenges facing analysts researching businesses in sub-Saharan Africa is finding written business and financial coverage – like FT, WSJ, SEC Filings (10K, 10Q, S1), Investigative Reporting, etc… It was refreshing to come across the Enterprise Map Series by Professor John Sutton at LSE. Professor Sutton faced the same challenges and ran into the same wall. Rather than whine about it, he got on a plane and tried to find the answers.

Not only has Professor Sutton published a detailed Enterprise Map of a few African countries, but also has translated them into other languages (Chinese and Portuguese). Continue reading “Professor John Sutton and the Enterprise Map Series”