In "Predictably Irrational" the author talks about how a price can be anchored to an arbitrary number. He sets up experiments where he suggests a random number (your social security number for instance) and then has you assign a price to some object. The astonishing effect (you are meant to be astonished) is that the price people assign is influenced by the random number. Proof positive that people are irrational and prices arbitrary.
He is right, prices are arbitrary, but they are not irrational. Prices are the expression of our individual preferences and those preferences are arbitrary. At it's root all economic activity consists of bartering, i.e. trading. I have something you want and you have something I want. We then negotiate a certain "price", a quantity of one for the other, and trade. There is nothing absolute in this interaction, no set "price". The value I place on the items I am trading is completely arbitrary. Someone else may have totally different preferences and negotiate a completely different "price". In fact, in that simple example both parties value the traded items differently. There is nothing irrational about it.
We go to the store and look at prices and think that those prices reflect some underlying value. Not true. Value is in the eye of the beholder. There is no such thing as an absolute value of anything. Just individual preferences expressed in the form of actions. Not all prices reflect our individual preferences. I won't go and buy a Mercedes for the price charged. Does it mean it is overpriced? Yes and no. It is overpriced to me because I won't pay that much, but someone else will.
Individuals differ in their preferences. Prices reflect aggregated preferences. This means that not all prices will reflect the value that people place on those objects. Some will be high, some will be low. None will be irrational in any meaningful sense.
Another thing to consider is that our preferences are not entirely consistent. Can I say with surety how much an apple is worth to me? What would I give for an apple today, tomorrow, next week? Maybe my circumstances change, maybe I become sick, is the apple worth the same in those situations? We don't know ourselves and our preferences as well as we think. Next time you go to purchase a new flat screen television just try and figure out exactly how many apples it is worth to you?