Answer to Question #248744 in Economics for nelly

Question

Choose which Principle of Economic Thinking in present in this scenario: 

You are out shopping for new clothes. There is a sweater you really like for $20. You only needed the one sweater, but you see that there is a buy-one-get-one 50% off sale. Knowing that you could get an additional sweater for only $10, even though you don't need it, causes you to get another sweater. 

Answer 1

There are two principles of economic that apply to this BOGO deal.

First, “rational people think at the margin,” meaning the buyer would think about bot h positiveand negative benefits of making purchase choice.

Another economic principle is “people respond to incentives” which “incentive” induces a person to act. In most cases, consumers are attracted to the deal of “buy one get one half off” sale because the cost of one second item seems so much cheaper. Considering the anchoring, a person having a set or expected price of an object of its worth. Therefore, with the BOGO deal it triggers the buyers because it offers the second object for half, which seems so much cheaper than your anchor item.