Are Wii U Prices Manipulating Shoppers' Psychology?

December 3, 2012 BY danariely

The pricing structure of Nintendo’s Wii U could manipulate shopper psychology via the decoy effect (see here and here for more on the effect).

The Wii U is mainly available in two forms: a $350 Deluxe version and a $300 Basic, and without a doubt the $350 deluxe is a much better deal for most shoppers..

The decoy effect is a psychological bias in which the valuation of an option in a choice set increases with the introduction of an option that is directly inferior to a specific option in the choice set.

In the case where the choice set is a video game console, and the Basic version is a directly inferior option to the Wii U Deluxe, the Deluxe option shines in comparison. This may lead consumers to overvalue the Wii U Deluxe, both in general and as compared to other console options (e.g. an X-Box Bundle).

Might Nintendo be purposefully using the decoy effect to boost holiday sales? Maybe. However, regardless of the intention, the Wii U pricing structure may lead shoppers to buy the Wii U Deluxe this holiday season – a decision they may not have made if the Wii U Basic did not exist.

~Troy Campbell~