Kahneman-Kalman Pricing Model

The Kahneman-Kalman Pricing Model combines insights from psychology and economics to explain how individuals perceive prices. It suggests that people's decisions about buying or valuing products are influenced not only by the actual price but also by their expectations, past experiences, and biases. For example, a consumer might feel a product is worth more if it’s presented with certain marketing tactics. This model highlights the subjective nature of value and how human behavior can affect pricing strategies in markets, ultimately impacting both consumer choices and business outcomes.