Brain science continues to illuminate the economic world. New research shows that the subjective "use value" of a good for a consumer varies with the understood price of that good -- call it the "It's Good To Be King Effect".
the researchers found that with the higher priced wines, more blood and oxygen is sent to a part of the brain called the medial orbitofrontal cortex, whose activity reflects pleasure. Brain scanning using a method called functional magnetic resonance imaging (FMRI) showed evidence for the researchers' hypothesis that "changes in the price of a product can influence neural computations associated with experienced pleasantness," they said.The study, by Hilke Plassmann, John O'Doherty, Baba Shiv, and Antonio Rangel, was published this week in the Proceedings of the National Academy of Sciences.
This chart shows that people ranked taste of a $45 wine higher than the same wine priced at $5, and the same for a different wine marked $90 and $10.
(Credit: CalTech, Stanford)The research, along with other studies the authors allude to, are putting a serious dent in economists' notions that experienced pleasantness of a product is based on its intrinsic qualities.
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