The price of regret
Let’s say you’ve just found a nice jacket in a store and are deciding whether to buy it. It’s a little pricey, so should you wait and hope it goes on sale in the future? Perhaps. Then again, the jacket might go out of stock before that happens, and you might never acquire it at all. Is it worth paying more now to avoid that feeling of regret? For many people, evidently, it is. And as a paper co-authored by an MIT scholar suggests, not only do consumers tend to buy goods partly to avoid that feeling of regret, but some retailers fail to notice this behavioral quirk and thus miss an opportunity to increase their revenues. Indeed, some retailers could have profits 7 to 10 percent higher if they pursued different pricing strategies, the study finds. That is, generally higher prices with occasional sales mixed in will yield more revenue than...