An Analysis of Tupperware Parties

So I realize the audience for this blog consists primarily of mormon moms bouncing aimlessly from blog to blog looking at pictures of friends and family, and, while that's really awesome when little Timmy learns to roll his tongue, I sometimes wish people would post more commentary about what they're thinking about and interested in. So, at the risk of killing your cute buzz, I'll take a shot.

I'm reading this book which bears the subtitle "Finding financial wisdom in unconventional places." Aside from being an awesome read, there's a chapter in there about the psychology of tupperware parties and how it relates to behavioral investing. I've never been to one of these parties, but I've heard stories that seem to backup the author's points. Over $1B in tupperware is sold each year through "consultants" that sell to their friends/family/neighbors. He mentions the reason these parties are so successful has everything to do with human nature and four tendencies that are basic tenets of human psychology. They are:

1. Reciprocation - If someone gives you something, you feel obligated to give something back. Early in the party, there is a quiz game that allows participants to win play money to spend on giveaway items. Ever wonder why the salesperson spends SO much time with you? How about the free gifts from charities in the mail? They're hoping you'll reciprocate in a much larger $ amount than they did.
   
2. Social Validation - One of the main ways we make decisions is by observing the decisions of others. Once the tupperware buying starts each transaction demonstrates that others want the product, providing validation.
3. Commitment and consistency - Once we make a decision, and especially if we've socially validated that decision, we are highly unlikely to change our views (even when the evidence is crystal clear). Each participant in the party is also encouraged to share with the group the uses of products she has already purchased showing evidence of commitment.
   
4. Liking - We all prefer to say yes to people we like. This is possibly the most powerful sellers of this high priced plastic. It's certainly tough to turn down a friend who is offering you a product that is backed by a room of friends buying and talking about how you just can't live without this excellent plastic box.

He talks about a couple other tendencies such as scarcity and authority, but what I thought was really interesting about this was how our decision making is so influenced by our environment and factors that have no rational basis. This book extrapolates this psychology to investing, but you could think about this in relation to any major decision you make. Another way to look at it is how do I get what I want? These are some interesting behavioral tips that might influence how we persuade people and also how we avoid being persuaded. Anyway, just some food for thought. Hope you enjoyed, please resume regularly scheduled my-kid-is-cuter-than-yours blogging.