Many consumers shrink from buying either the highest- orlowest-priced item among a group of similar items, seeming to prefer somethingin between. For example, retailer Williams-Sonoma Inc. was able to increasesales of its $275 bread machine by adding a second, slightly larger model toits catalogue at a price of just over $400. And Xerox Corp. at one time boostedsales of its high-volume copier to large corporations by introducing ahigher-priced model with a few extra bells and whistles. Which one of the following biases best explains this effect?1 pointAnchoringDispositionEffect Availability Heuristic HouseMoney Effect Framing StatusQuo Bias
Question
Many consumers shrink from buying either the highest- orlowest-priced item among a group of similar items, seeming to prefer somethingin between. For example, retailer Williams-Sonoma Inc. was able to increasesales of its 400. And Xerox Corp. at one time boostedsales of its high-volume copier to large corporations by introducing ahigher-priced model with a few extra bells and whistles. Which one of the following biases best explains this effect?1 pointAnchoringDispositionEffect Availability Heuristic HouseMoney Effect Framing StatusQuo Bias
Solution
The bias that best explains this effect is Anchoring. Anchoring refers to the tendency to rely too heavily on the first piece of information seen (the "anchor") when making decisions. In the context of the examples given, consumers are using the price of the first item they see as a reference point (or "anchor") for determining the value of the other items. So, when a more expensive model is introduced, the original
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