Psychological pricing | Economics homework help

 

Psychological Pricing

Behavior economics is a relatively new concept that was developed by  Daniel Kahneman and Amos Tversky and is known as the prospect theory.  The prospect theory posits that consumers are inspired by the  comparison of prices to the reference price rather than the actual  price. Please discuss why managing price expectations is as important as  managing price. Please give three examples of local restaurants using  prospect theory.  Include a minimum of one reference.

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