Explain the following almost universal features of late-night in- fomercials (a$2 billion industry) using reference-dependent preferences by answering our three questions: (i) what outcome is being evaluated in a reference-dependent way? (ii) what is the reference point?; and (iii) what feature of the value function explains the phenomenon, and how? (For this problem there may be multiple correct answers.)

(a)The infomercial names a price, but then gives a discount and sells at a cheaper price.

(b)The infomercial presents a baseline product as if that was it, but then keeps adding other products to the offer ("but wait, there's more!") Explain both why they do not just sell a single product, and why they break down the additional offers into many pieces instead of presenting it as a single package.

(c)The infomercial sets a short deadline for buying.