A number of you have mentioned to me via email that enjoyed the video (entitled “Rory Sutherland: Life lessons from an ad man”) that I showed at the end of last night’s class. My motivation for showing it (other than its obvious entertainment value) is that it provides compelling examples of product differentiation and the role of advertising, issues which are particularly important for monopolistically competitive firms. I also appreciated the way that the speaker, Rory Sutherland, brought in some perspectives from the behavioral economics (e.g., the concept of loss aversion in the case of how Italy’s bonus malus system for auto insurance is apparently designed).
The source of the video is TED, which is an acronym for “Technology, Entertainment, Design”. Among other things, TED hosts an annual conference where speakers are given roughly 15 minutes to present something amazing they’ve done and/or a topic that they know a lot about. This is the genesis for the “Rory Sutherland: Life lessons from an ad man” video from last night. Thus there are now well over 500 such “TEDTalks” available for viewing; also, there is a complete list of TEDTalks as of 10.26.09 if you care to view any other TEDTalks.
Here’s a short summary of this video taken from the TEDTalks as of 10.26.09 spreadsheet:
“Advertising adds value to a product by changing our perception, rather than the product itself. Rory Sutherland makes the daring assertion that a change in perceived value can be just as satisfying as what we consider “real” value — and his conclusion has interesting consequences for how we look at life.”
Finally, I end by embedding the video in this blog entry in case if you would like to view it again: