The absurd price that was there on purpose

For years, The Economist ran a strange price list: digital subscription, $59; print only, $125; print plus digital, also $125. Who would pay $125 for less? Nobody. And yet that useless option was the most profitable of the three.

Behavioural economist Dan Ariely tested it on his MIT students. With all three options on the table, the vast majority picked the full $125 bundle. Remove the absurd option, and the result flipped: most went for the cheap digital one.

It's called the decoy effect: an alternative designed to lose makes another look like a bargain. The customer doesn't compare — the comparison is handed to them, ready-made.

It works with three popcorn sizes at the cinema, with phone plans, with restaurant menus. Next time an option seems pointless, be suspicious: it may be hard at work.