Some high-end retail stores that distribute mail-order catalogs will prominently offer some very high priced goods for sale (for example, a luxury sports car with gold-plated interior trim) in addition to their regular line of merchandise. Behavioral economists argue that the stores do not really plan to sell these goods, but they use these items to provide the customers with a high reference point for the prices of the other goods in the catalog. This practice is an example of:
A) the ultimatim game.
B) loss aversion.
C) anchoring.
D) none of the above

Question

Quizplus · Accepted Answer

This practice is an example of anchoring, as the high priced goods are used to provide a reference point for the prices of other goods in the catalog. The stores may not actually expect to sell these high priced goods, but they can influence customers' perception of the value of other items in the catalog.

Some High-End Retail Stores That Distribute Mail-Order Catalogs Will Prominently