Economics @ ITT

Oversight or Intention?

Posted in economics, microeconomics by ittecon on January 17, 2013

I passed by a Dunkin’ Donuts shop this morning—alright, so I stopped in—, and the pricing structure caught my eye. For $0.99 I could buy 2 donuts, $2.99 for 6, or a dozen for $5.99. This means the more I buy, the higher the unit cost, so I’d be better off buying a half-dozen pair of donuts for $5.94 rather than a dozen at the stated price. What gives?

A dozen Dunkin' Donuts

This is not the first time I have noticed an establishment with such a discrepancy, but it leaves me wondering: Is this intentional? Clearly, a rational person would choose the cheaper option, though most people won’t even notice the discrepancy.

Perhaps the time spent getting the cashier to ring my order would cost more than a nickel, thereby making ordering a dozen cheaper when accounting for transaction costs, but I prefer to chalk this up to people being Predictably Irrational.


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