Contagious: Why Things Catch On

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They wondered whether consumers find the idea of a discount so powerful that merely labeling something as “on sale” would increase purchase.
To test this possibility, Anderson and Simester created two different versions of the catalog and mailed each to more than fifty thousand people. In one version some of the products (let’s call them dresses) were marked with signs that said “Pre-Season SALE.” In the other version the dresses were not marked as on sale.
Sure enough, marking those items as o
...n sale increased demand. By more than 50 percent.
The kicker?
The prices of the dresses were the same in both versions of the catalog. So using the word “sale” beside a price increased sales even though the price itself stayed the same.
————— Another tenet of prospect theory is something called “diminishing sensitivity.” Imagine you are looking to buy a new clock radio. At the store where you expect to buy it, you find that the price is $35. A clerk informs you that the same item is available at another branch of the same store for only $25.


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