Anchoring Is Back Meet The Overpriced Hot Dog

I enjoy William Poundstone’s blog priceless…take a look at the following excerpt from his latest post…

“Absurdly priced menu items are more than a publicity gimmick. They’re an application of “anchoring,” a cognitive phenomenon discovered by psychologists Amos Tversky and Daniel Kahneman in the 1970s. Whenever we try to estimate a numerical value, we are unconsciously influenced by related numbers just considered. In this case, the diner in a touristy Manhattan restaurant is trying to decide how much he or she can afford to spend. The familiar prices back home don’t apply. That diner isn’t going to order a $69 hot dog, but might happily opt for an $17.95 cheeseburger. The hot dog makes the cheeseburger appear reasonable in comparison (even though $17.95 would be a ridiculous price for a cheeseburger almost anywhere else). In scores of careful laboratory studies, price contrasts like that affect decisions. Restaurateurs and consultants believe it works on menus, too.”

Click Here To Read: Anchoring Is Back Meet The Overpriced Hot Dog

About Miguel Barbosa

I run this site.

10. August 2010 by Miguel Barbosa
Categories: Behavioral Economics, Curated Readings | Leave a comment

Leave a Reply

Required fields are marked *