Anchoring and decoy pricing

What's a fair price to pay for something? In particular, for something you aren't familiar with?

In an ideal world you'd shop around to see a range of prices. But that isn't always practical: you might be in a hurry, or maybe the price isn't high enough to be worth the effort.

In a situation like this you might be influenced by anchor pricing.

Dropping an anchor

Imagine you've walked into a liquor store to buy a bottle of tequila. What's a fair price to pay?

The store may have placed bottles of a popular brand in a prominent location, and let's say they're $40 each. That could become your anchor price. Then you might be willing to pay $50 for a premium brand, or $30 for a generic one.

Compared to a shop down the road they might be over-charging by $10 a bottle, but the prices seem fair because your expectations have been anchored at $40.

Deploying decoys

A related practice is known as decoy pricing.

Imagine there was a bottle of generic tequila for $55 and a premium bottle for $50. Naturally you'd buy the premium one, because it looks like a bargain compared to the generic.

But it's possible the generic tequila is a decoy. The shop doesn't expect to sell any bottles — it's there purely to drive sales of the premium bottles, which might have a nice profit margin.

Online dating anchors and decoys

Would these practices work in the world of dating? People have to known to raise or lower their expectations based on partner availability, so maybe the use of anchors and decoys could be used to manipulate their selections.

A common practice with online dating apps is to show attractive profiles first. This makes the onboarding experience more enjoyable and improves customer retention, but might also anchor people's expectations too high. Then they would be less likely to say yes to later profiles — which conveniently keeps them single for longer, increasing the app's revenues.

Or another example: imagine a matchmaking service that only gets paid for successful matches. It could engage in decoy pricing by presenting their client alongside unattractive alternatives to make their client look good by comparison — the same way brides select unflattering dresses for their bridesmaids. That would improve the odds of their client being selected, and the matchmaker getting paid.

Of course this is all just speculation. But it seems plausible that anchoring and decoy pricing could be used in the dating world, for both good and evil.

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