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"Extra bacon?" Context Effects in Purchases of Additional Items

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Abstract

common and seemingly innocuous practice involves offering optional extraitems during the purchasing process. We study such a market with consumerswhose preferences for the extra are sensitive to the context of the more expensivebase product, making the extra offer appear more attractive than it actually is.The presence of context-sensitive consumers can soften competition in the marketfor the base product, making the base product more expensive than in a standardeconomy. This not only jeopardizes their own surplus but also creates a negativeexternality on the surplus of the other consumers who have standard preferences.

Suggested Citation

  • Brunner Philipp & Zihlmann, Christian, 2024. ""Extra bacon?" Context Effects in Purchases of Additional Items," FSES Working Papers 535, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    • Handle: RePEc:fri:fribow:fribow00535
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    File URL: https://folia.unifr.ch/documents/328311/preview/WP_SES_535.pdf
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    More about this item

    Keywords

    ontext effects; Relative Thinking; Salience; Extra items; Additionalproducts and services;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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