A Rare Gem
“We live in a fantasy world, a world of illusion. The great task in life is to find reality.”
Iris Murdoch, Author/Philosopher
I love antiques and the thrill and the competition of winning them at auctions. I have gone to hundreds of auctions and have found wonderful pieces, from beautiful 19th century china and rare Civil War pieces to decorative arts pieces from the 20th century. Not only am I fascinated at the prospect of the pieces I may find, I am always in awe of the psychology and buying patterns at work among fellow buyers at the sale.
I can’t tell you how many times I have taken my seat at an auction and watched an item go up on the block and bring in hundreds of dollars. The crowd is excited and holding their breath to see just how much this wondrous piece brings in. As the auctioneers gavel hits the block, the audience claps and cheers. Then, literally the very next day, I could attend another auction and quietly buy the same exact item for a mere $10. And I, wearing my best poker face, walk out of the auction house pleased with my new find, having purchased it at a fraction of the cost of yesterday’s buyer.
It is in these moments many would ask themselves, “what exactly is at work here?” One of the large factors at play is the perceived value of the item. In an article, on the website thinkingmanagers.com, author Edward de Bono explains this phenomenon: “No matter how real a value may be, it has no value at all until the value is perceived.”
Two products will often perform the same function and be of equivalent value. One may be offered at a high price by one company while another company may offer the same product at a substantially lower cost. More times than not, buyers will mistakenly perceive the lesser expensive product, (just like my auction find) to be of lesser value and will purchase the more expensive product because they mistakenly equate higher price with better quality. This is simply not always the case.