When reading the book Predictably Irrational, the author pointed out the way people look at prices and how it is difficult to make a decision on certain things. An example he used was about looking at two trips to Europe both were for one week and included air fare, hotel accommodations, tours and free breakfast every morning. The choice was between Paris and Rome. I mean how awesome would it be to go on a trip to Paris and Rome with everything included the choice is a hard one to make.
So to help you make that choice the travel agent installs a decoy, a third option. This third option is the mental bomb that blows everything we thought first about out first decision out of the water. OK are you ready to hear your third choice? OK here it is, Rome without the free breakfast aka -Rome aka the decoy. According to Dan Ariely you would see how option three is a step down the ladder from the other Rome package. So you are now tricked into choosing Rome with everything included. Talk about your mind being hit with a mental katana from a metal ninja.
When I first read this I thought it was interesting, I had also had some idea about the way companies price their merchandise since mi madre has worked in retail for fifteen years. Her old boss owned her own little kids clothing store and was always anal about the way the clothes were tagged. Luckily my mom had been working with her for a long time and knew the ways of the force when it came to the labeling. "People like whole numbers" my mom said "give then an odd price like a $1.75 they won't buy it."
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