Behaviouronomics: The Veblen Effect

Influence by Robert Cialdini is a book that I always keep face out on my bookshelf. Not a month goes by when I don’t pick it up and thumb through random chapters. Cialdini first published his book in early 1980s and it’s still revered as the bible of human psychology by many including Charlie Munger.

You couldn’t start with a better book than Cialdini’s ‘Influence’, writes Munger, “Academic psychology has some very important merits alongside its defects. I learnt this eventually, in the course of general reading, from this book, ‘Influence’, aimed at a popular audience. I immediately sent copies of Cialdini’s book to all my children. I also gave a share of Berkshire stock [A share] to thank him for what he had done for me and the public.”

Today, a single class-A share of Berkshire stock is valued at over $300,000. On another occasion, Munger wrote –

Fairly late in life I stumbled into this book, Influence, by a psychologist named Bob Cialdini.. Well, it’s an academic book aimed at a popular audience that filled in a lot of holes in my crude system. In those holes it filled in, I thought I had a system that was a good-working tool.

Cialdini opens the first chapter with a story of his friend who had a jewelry store. The story involved a certain turquoise jewelry that she was finding hard to sell. In spite of a busy tourist season and an overcrowded store her customers were ignoring the turquoise pieces. She experimented with few standard sales tricks like displaying them prominently and even asking the sales staff to push the turquoise jewelry items hard. But no luck. She was unable to move them.

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