Anchoring the Mind: Behavioral Economics of Decoy Pricing

When presented with a small coffee for three dollars and a large for seven, most people choose the small. Add a medium for six dollars and fifty cents, and suddenly the large becomes the best seller. The medium option was never actually meant to be sold. It is a "e;decoy,"e; a carefully calculated asymmetric option designed solely to shift your perception of value. Human beings are terrible at a...