How Price Points Can Trick Shoppers Into Making a Purchase

They simplify consumers' buying decisions & encourage those on-the-fence to purchase with relatively little thought.

“Five dollars is a magic number.” — Unnamed restaurant industry consultant.

Thanks to decades of behavioral economics research, we now know that microeconomic theories often fail to describe actual buying behavior. For instance, a basic microeconomic theory postulate is that as prices go up, demand should go down. In the real world, however, this is freq…