1. The principle of Contrast

• This trick is basically that humans are trained to compare and contrast. So if you keep a bad product next to a worse product, then it will look amazing too.

• People don’t make their choice objectively, they make their choice in comparison to options available around them.

• A lot of business take gross advantage of this human flaw.

Real life example of this principle

• Real estate brokers use this trick all the time. They will show you a shitty house they don’t want to sell and quote a high price. Then they will take you to the house they really want to sell.

2. The principle of Reciprocity

• This is the proverbial “You scratch my back, I’ll scratch yours….” Meaning if you do a favour for someone (and make them aware that it’s a favour), they’ll be forced to do something for you out of guilt

• People are wired this way. If you do a favor, they tend to feel indebted to you. They want to pay you back somehow.

• So, businessmen give you free gifts or their products. You feel indebted to them, and become loyal to their products.

Real life example of this principle

• In 1985 earthquake shook Mexico. Ethiopia, a country dealing with crushing famine gave generously to help Mexico. Why? in 1935, Mexico loyally defended Ethiopia when Italy came trouncing into their territory.

3. The principle of Scarcity

• If people think that something is going to run out, or is forbidden from them they will rush to buy it. The “Limited Time Only” sales, ‘collectors edition, ‘limited edition’ and “While Supplies Last” phrases are the examples of this one.

Real life example of this principle

• Julius Caesar had a unique problem. Potatoes were a new addition into the farms of Rome. There were lot of potatoes being produced, but people were not buying it. In fact no one gave a flying hoot about it. He reduced the prices. Tried to include it in the royal meals to create an aspirational image for potatoes. But, nothing worked.

• So he devised a clever plan. He guarded all the potato farms in the kingdom with his best soldiers. He made a point that everyone noticed how guarded potato farms were.

• This slowly created curiosity amongst the masses. Suddenly potatoes got people excited. Slowly word got out and people were jumping farms, and getting themselves killed in the process to get their hands on potato.

• Potato became a hype in Caesar’s Rome because it was guarded and something people couldn’t get easily. Or more accurately WEREN’T ALLOWED to get it.

Jim Jacob's answer to Do you think having sex is overhyped thing among Indian youth? Why?
Beware of these tricks. These tricks were first brought to attention in this book called Influence: The Psychology of Persuasion. I have reviewed this book below. You should check it out. The video also has suggestions to some great books on leadership and success in business