CPM CPM Price Psychology & Behavioral Economics

Question 1

Charm pricing (e.g., $9.99 instead of $10.00) leverages which cognitive bias?

Accepted Answer

Left-digit anchoring

Answer

Loss aversion

Answer

Sunk cost fallacy

Answer

Framing effect

Question 2

The decoy effect in pricing involves adding a third option primarily to:

Accepted Answer

Make the target option appear more attractive by comparison

Answer

Lower overall price perception

Answer

Comply with price discrimination laws

Answer

Reduce cognitive load for buyers

Question 3

Prospect theory suggests buyers are more motivated by:

Accepted Answer

Avoiding losses than acquiring equivalent gains

Answer

Maximizing total value per dollar

Answer

Seeking the lowest available price

Answer

Anchoring to historical prices

Question 4

When a retailer sets a high 'original' price and then offers a discount, this exploits which pricing psychology principle?

Accepted Answer

Price anchoring

Answer

Sunk cost fallacy

Answer

Endowment effect

Answer

The Diderot effect

Question 5

Which framing approach typically generates higher willingness to pay for an upgrade?

Accepted Answer

'Upgrade for only $5/month more' vs. 'Upgrade costs $60/year'

Answer

'Annual plan vs. monthly plan'

Answer

'Premium tier vs. basic tier'

Answer

'Pay now vs. pay later'

Question 6

The 'pain of paying' concept in behavioral pricing suggests cash transactions lead to:

Accepted Answer

Greater purchase reluctance than card or digital payments

Answer

Higher customer satisfaction

Answer

Lower return rates

Answer

More rational price comparisons