Question
Julia is in a dress shop and finds a nice shirt. The tag price is $60 and she thinks it is too expensive. She decides
Julia is in a dress shop and finds a nice shirt. The tag price is $60 and she thinks it is too expensive. She decides not to buy, thinking that she would have opened her wallet if the price was no higher than $58. When she is about to leave the shop, the salesman offers a lucky draw promotion game: Julia can roll the dice and enjoy a discounted price of $48 if she rolls a 1 or a 6, but she needs to pay $66 if she rolls other numbers. Either case Julia is obligated to buy the shirt if she accepts the lucky draw offer. Julia happily takes the deal and tosses a coin. And, before Julia makes her decision, the salesman points to their policy written on the all, saying she needs to pay $5% surcharge – i.e. total $69.30 – in the case of rolling a 1 or a 6 if paying with a credit card. Julia rolls a number 4. And she decides to pay salesman $66 in cash. While she steps out of the shop with the shirt, she thinks that she would have not taken the lucky draw offer if the salesman had offered $69.30 credit card payment price with an on-the-spot discounted price option of $66 if paid in cash.
On the way home, Julia meets a friend who gets excited about the shirt Julia bought and offers Julia $70, in cash, for the shirt. She refuses to sell it and keeps heading home, dancing to Pharrell Williams’ hit song ‘Happy’.
Question: Discuss Julia’s shopping behavior from micro/behavioral economics perspectives.
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