SCIENTISTS AT CALTECH and Stanford recently published the results of
a peculiar wine tasting. They provided people with cabernet
sauvignons at various price points, with bottles ranging from $5 to
$90. Although the tasters were told that all the wines were
different, the scientists were in fact presenting the same wines at
different prices.

The subjects consistently reported that the more expensive wines
tasted better, even when they were actually identical to cheaper wines.

The experiment was even more unusual because it was conducted inside
a scanner - the drinks were sipped via a network of plastic tubes -
that allowed the scientists to see how the subjects' brains responded
to each wine. When subjects were told they were getting a more
expensive wine, they observed more activity in a part of the brain
known to be involved in our experience of pleasure.

What they saw was the power of expectations. People expect expensive
wines to taste better, and then their brains literally make it so.
Wine lovers shouldn't feel singled out: Antonio Rangel, the Caltech
neuroeconomist who led the study, insists that he could have used a
variety of items to get similar results, from bottled water to modern art.

Expectations have long been a topic of psychological research, and
it's well known that they affect how we react to events, or how we
respond to medication. But in recent years, scientists have been
intensively studying how expectations shape our direct experience of
the world, what we taste, feel, and hear. The findings have been
surprising - did you know that generic drugs can be less effective
merely because they cost less? - and it's now becoming clear just how
pervasive the effects of expectation are.

The human brain, research suggests, isn't built for objectivity. The
brain doesn't passively take in perceptions. Rather, brain regions
involved in developing expectations can systematically alter the
activity of areas involved in sensation. The cortex is "cooking the
books," adjusting its own inputs depending on what it expects.

Although much of this research has been done by scientists interested
in marketing and consumer decisions, the work has broad implications.
People assume that they perceive reality as it is, that our senses
accurately record the outside world. Yet the science suggests that,
in important ways, people experience reality not as it is, but as
they expect it to be.

. . .

Even our most primal bodily sensations, like pain, are vulnerable to
the influence of expectation. Tor Wager, a neuroscientist at Columbia
University, gave college students electrical shocks while they were
stuck in a brain-scanning machine. Half of the people were then
supplied with a placebo, which in this case was a fake pain-relieving
cream. Even though the cream had no analgesic properties - it was
just a hand moisturizer - people given the pretend cream said the
shocks were significantly less painful.

Wager then imaged the specific parts of the brain that controlled
this psychological process. When people were told that they'd just
received a pain-relieving cream, their prefrontal cortex, a brain
area normally associated with rational thought, responded by
inhibiting the activity of brain areas (like the insula) that
normally respond to pain. However, when the same people were informed
that the cream was "ineffective," their prefrontal cortex went
silent. Because people expected to experience less pain, they ended
up experiencing less pain. Their predictions became self-fulfilling prophecies.

A similar mental process helps explain a wide variety of seemingly
bizarre consumer behaviors. Baba Shiv, a neuroeconomist at Stanford,
supplied people with an "energy" drink containing a potent brew of
sugar and caffeine. Some participants paid full price for the drinks,
while others were offered a discount. The participants were then
asked to solve a series of word puzzles. To Shiv's surprise, the
people who paid discounted prices consistently solved fewer puzzles
than the people who paid full price for the drinks, even though the
drinks were identical.

"We ran the study again and again, not sure if what we got had
happened by chance," Shiv says. "But every time we ran it we got the
same results."

Why did the cheaper energy drink prove less effective? According to
Shiv, a kind of placebo effect is at work. Since we expect cheaper
goods to be less effective, they generally are less effective, even
if they are identical to more expensive products. This is why
brand-name aspirin works better than generic aspirin and why Coke
tastes better than cheaper colas, even if most consumers can't tell
the difference in blind taste tests.

"We have these general beliefs about the world - for example, that
cheaper products are of lower quality - and they translate into
specific expectations about specific products," said Shiv.

One of the implications of Shiv's experiment is that it's possible to
make a product more "effective" by increasing its price. A good
marketing campaign can have a similar effect, as it instills
consumers with lofty expectations about the quality of the product.
For instance, Shiv cites research showing that cars made in the same
factory, with the same parts, but sold under different brand names
(such as Toyota and Geo) receive markedly different reliability
ratings from consumers. When we drive a car with a less exalted brand
name, we are more likely to notice minor mechanical problems.

Expectations can even play havoc with experts. A few years ago,
Frederic Brochet, a cognitive psychologist at the University of
Bordeaux, conducted a rather mischievous experiment. He invited 54
experienced wine tasters to give their impressions of a red wine and
a white wine. Not surprisingly, the experts described the wines with
the standard set of adjectives: the red wine was "jammy" and full of
"crushed red fruit." The white wine, meanwhile, tasted of lemon,
peaches, and honey. The next day, Brochet invited the wine experts
back for another tasting. This time, however, he dyed the white wine
with red food coloring, so that it looked as if they were tasting two
red wines. The trick worked. The experts described the dyed white
wine with the language typically used to describe red wines. The
peaches and honey tasted like black currants.

According to Brochet, the lesson of his experiment is that our
experience is the end result of an elaborate interpretive process, in
which the brain parses our sensations based upon our expectations. If
we think a wine is red, or that a certain brand is better, then we
will interpret our senses to preserve that belief. Such distortions
are a fundamental feature of the brain.

Nevertheless, scientists insist that consumers can take steps to
protect themselves from their expectations. "Try to fact-check
yourself," Shiv says. "Organize a blind taste test. Experiment with
generic cold medicines, but don't let yourself know that they are
generic. Decide how you feel about a pair of shoes before you look at
the price tag." Shiv is convinced that this kind of
self-experimentation can save consumers money. Instead of trusting
big-name brands, or naively assuming that we always get what we pay
for, consumers can learn to bargain hunt.

Rangel's wine experiment demonstrated the benefits of this approach.
After the researchers finished their brain imaging, they asked the
subjects to taste the five different wines again, only this time the
scientists didn't provide any price information. Although the
subjects had just listed the $90 wine as the most pleasant, they now
completely reversed their preferences. When the tasting was truly
blind, when the subjects were no longer biased by their expectations,
the cheapest wine got the highest ratings. It wasn't fancy, but it
tasted the best.