Originally Posted by
kevincure
It's called the Chivas Regal Effect - when you drop the price, demand *also* drops as people believe that the good is worth less than it once was. Any business school will tell you that the timing of price drops/increases is critical (and the way you frame them also matters - i.e., you don't add a 5% surcharge for buying plane tickets over the phone, but instead quietly raise all prices 5% and give a 5% discount to people who buy over the net).
As Zach said, a price drop this close to launch is a sign that a) Nintendo didn't know what they were thinking when they set the 150 price originally and/or b) Nintendo is exhausting the number of consumers who'll pay 150, whereas Sony has millions ready to drop two c-notes on the PSP. Either way, a loss for Nintendo.
Oh, lest I forget one of the most important "framing effects": Inflation bias. If consumers expect a price to drop in the near future, they won't buy because they're waiting for the price to drop. If Nintendo drops the price that close to launch, consumers will believe that the price will drop again relatively soon - therefore, sales may drop because of the price cut even if there's no Chivas Regal.