Give a patient a pill and they will feel better. Give the same patient the exact same pill and tell them it was purchased at a wholesale discount, and these same people won’t feel as good.
At least that is what a study by Shiv, Carmon and Ariely (2005) found.
In three experiments, the authors show that consumers who pay a discounted price for a product (e.g., an energy drink thought to increase mental acuity) may derive less actual benefit from consuming this product (e.g., they are able to solve fewer puzzles) than consumers who purchase and consume the exact same product but pay its regular price. The studies consistently support the role of expectancies in mediating this placebo effect.
A question remains, are price and quality related? A study by Riesz (1979) looks for a correlation between price and quality as reported by Consumer Reports for packaged food products. “He concludes that the correlation was near zero, and in cases such as frozen foods, it was even negative.”
Thanks to ‘Undercover Economist‘ Tim Harford for link.