The Psychology of Pricing: Why You Pay More Than You Should

Behavioral economics reveals how pricing exploits cognitive biases. Left-digit effect ($9.99 feels much cheaper than $10). Anchoring (showing original price makes discount feel bigger). Decoy effect (adding a third option makes one look better). Charm pricing (prices ending in 9 or 7). These effects persist even when consumers know about them. AI-powered dynamic pricing takes this further: personalized prices based on individual willingness to pay. The most expensive items in stores are usually at eye level. Restaurants put the highest-margin items where your eyes go first.