Long story short, no, it is not insanity. It is asymmetric or nonlinear customer satisfaction. Think of the following two options:
So, as the monetary values are the same in both instances, should not the emotion feel about the same in "size" also? It does not, and hence what we now understand is that the sense of "value" has little to do with "price". One guy who likes watches can like his cheap divers Seiko as much - or more - than he does his megadollar Rolex.
The psychology of appreciation does not follow pricing.
- you find a bill of $100 on the parking lot, or
- you lose a $100 bill you had on your pocket
So, as the monetary values are the same in both instances, should not the emotion feel about the same in "size" also? It does not, and hence what we now understand is that the sense of "value" has little to do with "price". One guy who likes watches can like his cheap divers Seiko as much - or more - than he does his megadollar Rolex.
The psychology of appreciation does not follow pricing.
