A renowned psychologist, Henry Helson, has won numerous awards for his studies and analysis of behavioral patterns. His adaptation level theory has transcended the field of psychology and now enables economists to make predictions on consumer preferences and habits.
Helson's adaptation level theory deals with the psychology of human responses to focal, contextual and organic stimulus. The theory focuses and quantifies the way humans adapt to their environment, given the myriad of responses that human diversity provides.
Helson's adaptation level theory can be readily applied to economics and strategies on pricing. The theory was brought to the financial world by Brickman and Campbell in 1971, who surmised that the consumer's perception of price is dependent on both the actual price and their adaptation level of what that price should be.
Perception of Stimuli
Helson's adaptation level theory emphasizes the importance of stimuli and the differences in response from person to person. Each person has a different threshold, or adaptation level, from which they make critical choices.