Sometimes, expectations can determine outcomes. In articles on
the placebo effect, Wired and the New Yorker tell us that people
tend to believe that green pills are best at diminishing
anxiety, brand names are better, and medication taken 4 times
daily will generate more relief than a twice a day dose. And
then, because of the color, the name, or the dose, what we
expect happens because we expect it. In How We Decide, Jonah
Lehrer describes what happens when we presume that a pricier
product is better. For one experiment, researchers asked tasters
to compare glasses of wine with price labels. Sipping while
inside an MRI machine, taste-wise and neurologically,
participants reacted more positively to the “expensive”
wines–even though the glasses with $5 and $45 were from the same
bottle. The Economic Lesson In economics, the study of the
impact of people’s expectations on outcomes is called rational
expectations theory. If a retailer says a sale will start next
week, customers buy less now and create the retail