Imagine you’re in a department store to buy a carry-on suitcase. As you walk through the store, you notice the hefty price tag on a luxury watch on display. You have no interest in the watch, which sells for $2,000. Does the high price of the watch affect how much you would be willing to pay for the suitcase? Would the amount be any different if, instead, you had noticed a much lower price on a display of bath towels? Most people, believing they are rational shoppers, would say no. Yet we have found that prices for entirely unrelated products affect people’s willingness to pay.
A version of this article appeared in the July–August 2001 issue of Harvard Business Review.
