How does anchoring bias affect pricing?

Can you explain what anchoring bias is?

Sure! Anchoring bias is a cognitive bias where people rely too heavily on the first piece of information they encounter when making decisions.

How does this bias affect pricing in retail?

In retail, the initial price presented can serve as an anchor, influencing customers' perception of value and their willingness to pay.

Can you give me an example of this in action?

Absolutely! If a jacket is initially priced at $200 and then marked down to $100, customers may perceive the $100 price as a great deal, even if the jacket's true value is lower.

Are there any strategies to counteract anchoring bias?

Yes! Retailers can use strategies like presenting multiple price points or emphasizing product quality to help customers make more informed decisions.