embrace the power of context Behavioural economist and psychologist, Dan Ariely of Duke University, worked with The Economist magazine to test three one year subscription options: Option 1 – online only – $59.00 Option 2 – print only – $125.00 Option 3 – Print and online – $125.00 The outcomes were largely unsurprising Option 1 […]

embrace the power of context Behavioural economist and psychologist, Dan Ariely of Duke University, worked with The Economist magazine to test three one year subscription options: Option 1 – online only – $59.00 Option 2 – print only – $125.00 Option 3 – Print and online – $125.00 The outcomes were largely unsurprising Option 1 – 16% Option 2 – nil Option 3 – 84% In a second round, purchasers were offered: Option 1 – online only $59.00 Option 2 – Print and online $125.00 The outcome this time was: Option 1 – 68% (up from 16%) Option 2 – 32% (down from 84%) According to Ariely, these findings demonstrate the power of context in pricing. It is clearly a demonstration of the power of decoy pricing. The decoy price in round one (Print only at $125.00) drew purchases to the print and online option). Eliminating this option led purchasers…