Decision Making and Fuel Prices

Economics shows that in certain situations providing similar goods at different price points can increase profitability. Oil companies have started doing this when selling fuel.

Typically, the choices are laid out left to right, with the cheapest option at one end and the most expensive option at the other. The result of this is many customers resort to rules of thumb and take the middle choice. That’s fine, but at the place I was at yesterday they had put their most expensive option in the middle. I bet they make more money in the short term as a result of this layout. Whether they build long term goodwill with their customers is another issue.

One response to “Decision Making and Fuel Prices

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