Anchoring Effect

[TechMan]

http://youarenotsosmart.com/2010/07/27/anchoring-effect/

An article on "anchoring effect".  It essentially says that if you have a reference point for something (i.e. cost of a car) you are not going to go to far from that reference point in determining its fair value.  The article cites several different experiments and is a very interesting read.

[HankB]

Gee, the article suggests that the things you purchase in places like department stores have artificially high MSRPs so when they go "on sale" you think you're really getting a deal.

It's almost as if the stores KNOW this and use that fact to their advantage!

Imagine that!

[Boomhauer]

Gee, the article suggests that the things you purchase in places like department stores have artificially high MSRPs so when they go "on sale" you think you're really getting a deal.

It's almost as if the stores KNOW this and use that fact to their advantage!

Imagine that!

I didn't need an article to tell me that...

[MechAg94]

This seems like common sense.  Isn't that why you should shop around? 

I had to buy a new refrigerator last week.  I had no idea what they cost or what features were common today.  I went to 3 different stores that sell a lot of them looked at the brands and features in the price range I had in mind.  I then went back to the store with what I thought was the best deal for what I wanted. 

[zahc]

I new a guy who ran a skateboard shop. He had $80, ceramic bearings on display. I asked if anyone had ever bought them, and he said no. But, he said that after he put the $80 bearings in the display case, people bought much more of the $40 bearings, which previously were the most expensive bearings he carried.

[Headless Thompson Gunner]

I new a guy who ran a skateboard shop. He had $80, ceramic bearings on display. I asked if anyone had ever bought them, and he said no. But, he said that after he put the $80 bearings in the display case, people bought much more of the $40 bearings, which previously were the most expensive bearings he carried.

That's a common practice in bicycle shops.  They all have one super-duper Lance Armstrong $5,000 racing bike on display, which nobody ever buys.  But the presence of the $5,000 racing bike makes it easier to sell $2,000 and $3,000 racing bikes.