So what question has surprised you the most over
the years? Anything pop to mind? " 'Why does Japanese have
virtually no swear words, while Korean is chockablock with swear
words?' The answer was that the samurai culture of Japan made it
dangerous to run the risk of insulting someone, so people were
cautious about how they spoke in Japan," says Frank. "There was
never a similar tradition in Korea."
How is that a question of economics? "It's
the cost-benefit principle. I'd like to insult this guy, and in
Korea, I can, but in Japan, it might be really costly if I do," he
One thing that seems, well, crazy, is when hotels
charge different rates for the same kind of room. Aren't they in
danger of annoying their customers? "If you can figure out
ways to charge people different prices, that enables you to offer a
better deal for everyone. There's the example in the book of Apple
laptop computers on sale for different prices in black and white.
You might get offended if you bought the black one and realized it
was the same as the white one and that you paid a premium for it.
But if you reflect on the fact that the company is able to expand
its market, the cost of producing extra machines is very small. So
the fact that they're able to expand the market means they can set
a lower price for both machines. If they do it with what I'm
calling the hurdle method, they put a hurdle in your path and tell
you that if you want the cheaper price, all you have to do is jump
over a hurdle - like buy the color you don't like, wait a year and
buy the paperback, or ask about the special price [when you make a
hotel reservation]. As long as [those choices are] available to
people, you can't really complain that they charged you a higher
price," says Frank. "[You] could have gotten the lower price; [you]
chose not to."