Great Book: Predictably Irrational
I recently received Predictably Irrational by Dan Arielly from the TED book club -- and highly recommend it. Dan does a powerful job of convincing us that (1) People are not as rational (or smart) in making decisions as they think, and (2) The mistakes and errors that we make are systemic and predictable. Thus, we are predictably irrational.
Chapter Three was especially interesting to me, as Arielly describes an experiment which proves my "Penny Gap" theory. (A copy of the experiment is available on his website here.)
And for anyone trying to decide how to price an online service, I'd strongly recommend the first chapter -- which discusses the importance of setting relative context for price/value determination. (An excerpt from this chapter is available here.)