Why Do We Become 'Suckers,' and How Do Companies Win Our Hearts?

What Makes Some Prices Feel ‘Fair’ and Others ‘Exploitative’? A Deep Dive into the Fascinating Dance Between Price and Human Psychology.

Have you ever felt uneasy buying a $6 bottle of water at the airport or disappointed when you opened a snack bag only to find 90% air? Price is not just a string of numbers. It touches our emotions, sometimes making us angry, other times giving us satisfaction that we’ve made a wise purchase—a complex psychological game.

The central question of this article is this: What makes some prices feel ‘fair’ and others ‘exploitative’? Why are we willing to pay $7.25 for the same beer if it comes from a luxury resort hotel but feel $4.10 is too expensive if it’s from a shabby grocery store? This phenomenon shows that price is not determined solely by objective value; context and psychology play a far more important role.

This report delves deeply into the human psychology behind pricing. First, it explores three fundamental laws of behavioral economics that govern the ‘strange calculator’ in our minds. Then, applying these laws to real-world cases, it analyzes why some companies incurred consumer anger and failed, while others won consumers’ hearts and succeeded. Through this journey, we will no longer be passive ‘suckers’ but wise observers who understand the fascinating dance between price and human psychology.

Part 1: The Strange Calculator in Our Minds: Three Psychological Laws That Determine Price

When we look at the price tag of a product or service, our brain is not simply adding or subtracting numbers. Inside, complex emotions and biases such as ownership desire, fear of loss, and craving for fairness mix into irrational calculations. Understanding the three key psychological laws that drive this calculator is essential cultural literacy for anyone living in modern consumer society.

1.1 “Mine” Is Pricier: The Endowment Effect

Have you ever hesitated to sell a cherished item on a secondhand app thinking, “I just can’t sell it at this price”? Meanwhile, buyers often offer ridiculously low prices, causing disappointment. At the heart of this common conflict lies a powerful cognitive bias called the ‘Endowment Effect.’ This effect means that once something becomes ours, we assign it a much higher value simply because it is ‘mine,’ beyond its objective worth.

The clearest demonstration of this effect was the classic mug experiment conducted in 1990 by behavioral economics giants Daniel Kahneman, Jack Knetsch, and Richard Thaler. They divided college students into two groups: one group was given a free mug with the school logo and asked how much they would sell it for; the other group was asked how much they would pay to buy the mug without owning it. Traditional economic theory predicts similar valuations from both groups. However, the results were shocking. The median selling price (WTA, Willingness to Accept) among owners was about $7, while the median buying price (WTP, Willingness to Pay) among non-owners was only about $3. Sellers demanded more than twice what buyers were willing to pay. This stark gap is strong evidence of the endowment effect.

Why does this irrational phenomenon occur? The root cause lies in ‘loss aversion,’ a core concept of Kahneman and Amos Tversky’s ‘Prospect Theory.’ Loss aversion means people feel the pain of losses about 2 to 2.5 times more intensely than the pleasure of gains of the same size. Losing $20 hurts more than finding $20 feels good. From this perspective, selling the mug is perceived by the owner as a ’loss’ of their possession, while buying it is a ‘gain’ for the buyer. Because the pain of loss outweighs the joy of gain, sellers demand a much higher price to offset that pain.

Moreover, the endowment effect is not limited to legal ownership. ‘Psychological ownership’ alone can trigger it. For example, test-driving a car, using a free trial of software, or taking home several pairs of glasses to try on (like Warby Parker’s approach) creates a state of ‘quasi-ownership.’ Once we start feeling something is ‘mine,’ an emotional bond forms, and giving it up feels like a painful loss. This shows how deeply our economic decisions are tied to our self-identity. Owned items become part of ourselves, and selling them feels like tearing off a piece of ourselves—something traditional economics’ ‘rational man’ assumption cannot explain.

1.2 Feeling Gains More Than Breaking Even: Transactional Utility

Recall the ‘beach beer’ experiment mentioned earlier. Why are we willing to pay more for the same beer at a luxury resort than at a local store? The key to this puzzle lies in the concept of ‘Transactional Utility’ introduced by 2017 Nobel laureate Richard Thaler. According to Thaler, the total satisfaction we get from a purchase consists of two parts: the pure value of consuming the item itself, called ‘Acquisition Utility,’ and the subjective satisfaction from the deal itself, called ‘Transactional Utility.’

In the beach beer case, the acquisition utility is the same in both cases—the pleasure of drinking a cold beer. But transactional utility differs dramatically. Our minds hold a ‘reference price’—an expectation of what a product should cost in a given context. Paying $7 for a beer at a luxury resort is expensive but within an ’expected’ range, so transactional utility remains intact. Paying $7 for the same beer at a rundown local store violates our reference price, causing strong ‘negative transactional utility’ and a feeling of being ripped off. This unpleasant feeling can be so strong that it overwhelms the desire to drink the beer and leads to abandoning the purchase.

This principle appears everywhere in daily life. The thrill of unexpectedly finding a 20% off coupon is a classic example of positive transactional utility. Conversely, you might drive 20 minutes to save $10 on a $35 radio but not for the same $10 discount on a $640 TV. Although the absolute discount is the same, the relative discount rate is much higher for the radio, creating greater positive transactional utility.

Companies actively exploit this psychology in marketing. Furniture and clothing stores run ‘sales’ year-round so consumers can compare high ’list prices’ with discounted prices, feeling a strong sense of gain—high positive transactional utility—and opening their wallets. This clearly shows consumers are not just buying products but are buying ‘smart deals.’ Ultimately, our subjective perception of fairness in the transaction influences our purchase decisions as much as, or more than, the objective value of the product.

1.3 Fairness Comes Before Profit: Fairness Limits Profit-Seeking

A snowstorm hits the market. Demand for snow shovels surges, and a hardware store owner raises the price from $15 to $20. According to economic principles, this is a natural result of supply and demand. But do you think this price hike is ‘fair’?

Daniel Kahneman, Jack Knetsch, and Richard Thaler asked people this question in a phone survey and found a fascinating result. Most people judged raising prices due to demand surges as ‘unfair.’ However, if the wholesale price rose from $15 to $20, causing the retailer’s cost to increase, and the retailer raised the price from $20 to $25 accordingly, people considered this ‘fair.’

This study revealed a powerful invisible rule governing markets: ‘fairness.’ The researchers explained it with the ‘principle of dual entitlement.’ According to this principle, consumers and firms each have rights. Consumers have the right to the conditions of the ‘reference transaction’ (e.g., usual prices), and firms have the right to maintain their ‘reference profit.’

The implications are clear:

• Allowed behavior: Firms may raise prices to protect their reference profit when external factors (e.g., cost increases) threaten it. This is seen as fair because it relates to the firm’s survival.
• Disallowed behavior: Firms seeking extra profit by violating consumers’ reference transaction—especially exploiting demand surges—are seen as unfair, as they exploit consumers’ desperation.

This ‘fairness constraint’ explains why popular concert tickets sell for many times face value on the black market while organizers stick to official prices, and why car companies don’t sharply raise prices on hot new models despite long waits. Although huge short-term profits are possible, many firms fear the long-term damage to reputation and customer loss from being labeled ‘unfair.’

In the end, markets are not cold formulas but human spaces governed by strong social norms of ‘fairness.’ Understanding this invisible social contract is vital for business survival and suggests that the ‘reason’ for a price increase matters more than the ‘amount.’

Part 2: Companies That Provoked Consumer Anger: Trapped by ‘Unfairness’

The three laws of behavioral economics—endowment effect, transactional utility, and fairness—form the foundation of the relationship between companies and consumers. Ignoring or abusing these laws may yield short-term profits but ultimately costs consumer trust and leads to harsh consequences. Now, let’s vividly examine lessons from companies that fell into the trap of ‘unfairness’ and faced fierce consumer backlash.

2.1 Greed Is Punished: Martin Shkreli’s Daraprim Scandal and the COVID-19 Mask Crisis

The principle of ‘fairness’ is especially critical when human life and health are at stake. Exploiting vulnerable patients’ desperation for profit is socially condemned beyond mere business. The 2015 Daraprim scandal in the U.S. and the 2020 COVID-19 mask crisis worldwide starkly illustrate the consequences of violating this principle.

In 2015, former hedge fund manager Martin Shkreli’s Turing Pharmaceuticals acquired U.S. rights to Daraprim, a 62-year-old drug essential for treating toxoplasmosis, especially for immunocompromised patients like those with AIDS or cancer. Immediately after acquisition, Shkreli raised the price per pill from ~$13.50 to $750, a 5,000% increase overnight. Some patients’ annual treatment costs soared into the hundreds of thousands.

This sparked immediate social outrage. Medical societies condemned it as “unjustifiable for medically vulnerable patients,” and media dubbed Shkreli “America’s most hated man.” Shkreli likened himself to a “modern Robin Hood,” claiming profits would fund rare disease drug R&D. But his justification failed to convince the public. Daraprim was an old, proven drug, not an urgent R&D target. The public saw his claims as thin excuses for greed. He was later convicted on unrelated financial fraud charges and imprisoned. Though legally permissible, the price hike was forever recorded as a blatant violation of social fairness norms.

A similar outcry erupted in South Korea five years later. In early 2020, as COVID-19 spread, mask demand exploded, and some online sellers sharply raised prices. Masks that sold for 39,800 KRW suddenly went for 130,000 KRW. One seller bought masks from his father for 300 KRW and sold them for 4,500 KRW, a 15-fold markup. Consumers accused them of “profiteering on public health,” and complaints to the Korea Consumer Agency about health products surged by 1153.7% in January 2020 alone. On January 29, consumer complaints spiked dramatically.

The government intervened with regulations banning hoarding and introduced a public mask rationing system. Both the Daraprim and mask crises share a clear pattern: sellers exploited demand surges to severely violate consumers’ ‘reference transactions’ and seek huge profits. Their justifications (drug R&D, supply uncertainty) failed to gain public sympathy and were labeled ‘greed.’ This shows how strongly fairness acts as a constraint and how ignoring it leads to social outrage and government regulation.

2.2 Sneaky Tricks: Shrinkflation with Haitai’s Hometown Dumplings and the Snack Raft Story

When direct price hikes meet consumer resistance, companies often resort to subtler tactics. One is ‘shrinkflation’—reducing product quantity while keeping the price the same. A blend of ‘shrink’ and ‘inflation,’ this tactic aims to raise the effective price without consumers noticing, seen as a deceptive attack on consumers’ ‘reference transactions.’

In 2023, the Korea Consumer Agency and Fair Trade Commission confirmed shrinkflation in many domestic products. A notable case was Haitai Confectionery’s ‘Hometown Dumplings.’ Haitai reduced the weight of ‘Hometown Kimchi Dumplings’ from 450g to 378g (16% cut) and ‘Hometown Dumplings’ from 415g to 378g (8.9% cut). Other popular products like CJ CheilJedang’s Vienna sausages, Seoul Milk’s cheddar cheese, and OB Beer’s Cass cans also saw quantity reductions. Haitai explained it as aligning with competitors’ weights due to raw material cost burdens, but consumers saw it as shifting price hikes onto them.

Consumer frustration with these ‘invisible price hikes’ has long accumulated. The confectionery industry’s overpackaging, known as the ‘nitrogen snack’ controversy, is a prime example. The most creative and satisfying protest occurred in September 2014 when three college students taped together about 150 snack bags to build a raft and successfully crossed the Han River in 30 minutes. This performance satirized how Korean snacks are ‘half nitrogen, half snack,’ with so little content that even the nitrogen could float a person. Passersby cheered, and the event gained wide media attention, raising social awareness about overpackaging.

Shrinkflation and overpackaging particularly upset consumers because of their ‘deceptiveness.’ Unlike openly announcing a price hike due to cost increases, these tactics try to trick consumers for profit, fundamentally damaging trust between companies and consumers. The ‘snack raft’ protest resonated because it made visible the hidden ’tricks’ companies tried to conceal. It showed consumers are no longer passive victims but can creatively confront corporate unfairness.

2.3 Hurting Loyal Customers: NC Dinos’ ‘Market Price Policy’ and Uber’s Surge Pricing

Technological advances have given companies powerful tools to monitor demand in real time and adjust prices dynamically—known as ‘dynamic pricing.’ But this double-edged sword can deeply wound loyal customers and betray brand trust if used without transparency and fairness. The Korean pro baseball team NC Dinos’ ‘market price policy’ and ride-sharing service Uber’s ‘surge pricing’ are prime examples of failure.

In 2022, NC Dinos became the first KBO team to implement dynamic pricing, adjusting ticket prices in real time based on opponent, ranking, weather, and other factors. However, fans reacted coldly, mocking the team as ‘Market Price Dinos’ due to constantly fluctuating prices like a fish market. The biggest issue was the ‘black box’ nature of the pricing algorithm—fans had no insight into how prices were set or why they changed daily. Some weekday outfield seats priced at 8,000 KRW soared to 57,500 KRW, causing unreasonable spikes and burdening fans. Loyal fans who would attend any game felt exploited, betrayed by their own devotion.

This mirrors global criticism of Uber’s ‘Surge Pricing,’ which raises fares automatically when demand exceeds supply (e.g., rush hour, bad weather, after big concerts). Economists explain it as an efficient mechanism to attract more drivers and balance supply and demand. But consumers see it as ‘price gouging’ at their most desperate moments. The unpredictability and opacity of fare increases leave consumers powerless and feel like a cynical exploitation. A George Washington University study even found Uber and Lyft algorithms charge higher fares in predominantly non-white and low-income Chicago neighborhoods, raising fairness concerns about algorithms.

The core failure in NC Dinos and Uber cases is neglecting not only ‘outcome fairness’ but also ‘procedural fairness.’ Consumers care deeply about not just the final price but also whether the ‘process’ of price determination is transparent, predictable, and fair. Black-box algorithms strip consumers of control, which itself feels unfair. In the AI and big data era, ’the algorithm decided’ is no longer an excuse. Dynamic pricing without procedural fairness loses consumer trust and leaves irreparable brand damage.

Part 3: Companies That Won Consumers’ Hearts: Selling ‘Value’ and ‘Trust’

Not all pricing policies provoke consumer anger. Companies that deeply understand behavioral economics and wisely apply it in communication gain consumer trust and build strong brand equity through pricing. They don’t just sell products but offer ‘value’ and sell ‘trust.’ Now, let’s explore the secrets of success through Netflix’s skillful subscription price hikes, Disney’s fair dynamic pricing, IKEA’s transformation of inconvenience into value, and Simmons’ trust-building during crises.

3.1 The Art of Price Increases: How Netflix Raised Subscription Fees

Raising subscription fees is risky, often leading to customer churn. Yet Netflix has periodically increased prices while minimizing backlash and sustaining growth. Their secret lies in how they announce price hikes. Netflix excels at crafting a persuasive ‘value-based narrative’ explaining why the increase is necessary.


Netflix’s strategy includes:

• Linking price to value clearly: Each price hike is tied to massive investments in their core value—‘high-quality original content.’ They communicate, “Thanks to your higher fees, we can keep producing great shows like ‘Stranger Things’ and ‘The Crown.’” This reframes the price increase from a ’loss’ to a ‘shared investment’ in better service, aligning with public psychology that cost-based hikes are fair.
• Choosing strategic timing: Netflix raises prices not during crises but after subscriber growth and major hits like ‘Squid Game,’ framing increases as natural outcomes of success, not financial pressure. This maintains a positive brand narrative.
• Transparency and choice: Netflix gives ample notice before hikes and offers tiered plans (Basic, Standard, Premium), allowing price-sensitive customers to downgrade rather than cancel. Recently, they introduced a cheaper ad-supported tier, attracting new price-conscious segments and diversifying revenue.

In sum, Netflix turns a potentially negative event into an opportunity to reaffirm their brand promise (delivering fresh, exciting content). They continuously prove and communicate the ‘value’ customers pay for, successfully managing psychological resistance to price increases.

3.2 Is ‘Fair’ Dynamic Pricing Possible? Disney’s Transparent Pricing Strategy

The NC Dinos and Uber cases showed how easily dynamic pricing can anger consumers. But is ‘fair’ dynamic pricing impossible? The global theme park Disneyland proves otherwise. Disney also varies prices by demand but fundamentally differs in approach. Their success lies in returning ‘control’ to consumers through ‘transparency’ and ‘predictability.’

Disney’s pricing is the opposite of NC Dinos’ ‘black box.’ They set higher prices on busy weekends and holidays, lower prices on quiet weekdays, and publish all prices transparently on a year-round calendar. For example, Disneyland categorizes tickets from ‘Tier 0’ to ‘Tier 6,’ and customers can easily check which dates fall into which tier and their prices on the website.

This system has remarkable psychological effects:

• First, it provides predictability. Customers can plan vacations months or even a year ahead, knowing exact ticket prices. No anxiety about sudden price changes like ‘market price’ models.
• Second, it gives control. Customers are no longer passive victims of price swings. They can choose cheaper ‘Tier 1’ or ‘Tier 2’ dates to save money, feeling the pricing system is a tool they can ‘use.’
• Third, it establishes clear justification. The price difference is intuitively logical—busier days cost more. It’s seen not as profit maximization but as a rational effort to manage crowding and maintain visitor experience quality.

Table 1: Unfair vs. Fair Dynamic Pricing Models

Disney’s case proves dynamic pricing itself isn’t inherently bad. The key is how it’s implemented. When designed around procedural fairness—transparency, predictability, and consumer choice—dynamic pricing becomes a rational business practice beneficial to both companies and consumers. Disney turned a potentially negative tool into a positive one by empowering consumers.

3.3 Turning Customers’ ‘Time’ into Money: IKEA’s ‘Time Currency’ Campaign

Customer pain points are every business’s challenge. Most try to reduce or eliminate inconvenience. But Swedish furniture giant IKEA went further, creatively turning customer inconvenience into new ‘value’ with their Dubai campaign ‘Buy With Your Time.’

IKEA stores are usually located outside city centers due to space needs, meaning customers spend significant time and effort visiting. IKEA Dubai focused on this ‘long travel time’ inconvenience and decided not to fix it but compensate for it.

The campaign was simple yet ingenious. Customers showed their Google Maps timeline on their phones at checkout. Staff checked the travel time to the store and converted it into ‘time currency’ based on Dubai’s average hourly wage. Customers could use this ’earned’ time currency to buy furniture or get discounts.

The psychological impact was huge, a brilliant application of ‘transactional utility’:

• First, it reframed the negative experience of ’long driving’ into a positive experience of ‘earning money.’ Travel time was no longer a wasted cost but a rewarded investment, creating massive ‘positive transactional utility’ throughout the shopping journey.
• Second, it sent a strong message that IKEA valued and respected customers’ time and effort. This went beyond simple discounts, showing deep empathy and boosting brand loyalty and positive word-of-mouth.

IKEA didn’t move stores or lower prices. They just shifted the perspective on the ‘cost’ of visiting into a ‘benefit.’ This kind of deep, empathetic understanding of the customer journey and creative thinking can transcend traditional marketing limits and become the most powerful weapon to win customers’ hearts.

3.4 Shining Through Crisis with ‘Shared Pain’: Simmons’ Price Freeze Declaration

Economic crises with inflation test a company’s true value. While most raise prices due to rising raw material and labor costs, companies choosing ‘shared pain’ with consumers earn deep trust. South Korea’s mattress brand Simmons’ price freeze declaration is a shining example of applying the ‘fairness’ principle brilliantly in crisis.

In 2022 and 2023, many furniture companies, including top players Hanssem and Hyundai Livart, raised prices amid high inflation. But Simmons took the opposite path, declaring a two-year consecutive price freeze. CEO An Jung-ho clearly stated, “In tough times, going together and being loved by consumers for a long time is more important.”

This decision created a powerful narrative of ‘shared pain’:

• First, Simmons firmly established an image as a ‘good company.’ Their effort to ease consumers’ burdens during economic hardship signaled prioritizing long-term relationships over short-term profits, building strong trust and loyalty.
• Second, the ‘shared pain’ message was authentic internally. Simmons declared an emergency management system, voluntarily cutting executives’ salaries by 20% while raising employees’ wages, showing the whole company practiced shared sacrifice, not just marketing rhetoric.

Simmons’ case shows the ‘fairness’ principle can be an active competitive advantage, not just a defensive constraint. In unstable economies, consumers become more sensitive to price fairness. When companies absorb cost increases instead of passing them on, it wields more power than any marketing campaign. Simmons sacrificed short-term profit but gained the priceless asset of ‘consumer trust.’

Conclusion: Price Is Not a Number but a ‘Relationship’

Through this long journey, we explored the complex and fascinating world of human psychology behind price tags. From Martin Shkreli’s greedy price hikes to Simmons’ altruistic price freeze, diverse cases point to one clear fact: price is not just a number but the most direct and powerful communication tool defining the ‘relationship’ between companies and consumers.

Failures like Shkreli, COVID-19 mask profiteers, shrinkflation companies, and NC Dinos’ market price policy were not mere economic miscalculations. They unilaterally broke the social contract of ‘fairness’ consumers hold and destroyed the foundation of trust in the relationship. They disrespected consumers’ ‘reference transactions’ (fairness violation), lacked transparency in the transaction process (procedural fairness violation), and exploited consumers’ inconvenience and desperation. The result was social condemnation, anger, and sometimes government regulation.

In contrast, Netflix, Disney, IKEA, and Simmons teach the opposite lesson. They upheld transparency, value-based narratives, and empathy in pricing decisions and communication. Netflix reframed price hikes as a ‘shared investment’ in better content; Disney made dynamic pricing a tool consumers could ‘use’ through transparent information; IKEA turned inconvenience into a rewarding benefit; Simmons chose to share pain in crisis, earning deep trust. At the heart of all these successes was respect for consumers as long-term partners, not mere profit sources.

Ultimately, a company’s price reflects its values. When prices feel fair, consumers willingly open their wallets and become loyal brand supporters. When prices feel unfair and exploitative, the relationship irreversibly breaks down.

Next time you face a price tag at a supermarket, online store, or ballpark, listen to what those numbers tell you. Whether you feel ripped off or lucky, you are no longer a passive consumer. You are a wiser observer who understands the fascinating dance between price and human psychology.