Mechanism of Price Anchoring in Dining Consumption Decision-Making: An Analytical Study on Pricing Strategies

The price anchoring distortion effect on restaurant dining choice has been a central topic of behavioral economics research. Empirical evidence proved that specially positioned expensive reference products in menu design will have a substantial impact on willingness to pay for consumers. Nevertheless, literature still leaves behind several research gaps concerning the numeric influence of an anchor in dining-in Chinese restaurants, its net gains as welfare impacts to middle-to-low earners, and the neurophysiology of decisions’ processes. In the present study we explore empirically the behavioral intervention mechanism of an anchoring price in restaurants in real world settings. This study’s methodology consists of:(1) the acquisition of 3000 orders from three mid-ranged Beijing restaurants in a span of four weeks that employ a high-anchored treatment item as a part of their daily routine as well as conducting an actual natural experiment; (2) applying DID and eye-tracking to a representative sample of 100 customers. It is theoretically implied that anchors behavior is purely welfare transfers through behavioral biases, therefore it needs to introduce a MATI. Reverse rebellion results of students’ heterogeneity give evidence of micro-scale adjustments of the theory “nudge”. This work proposes an innovative framework: an intersection point between behavioral economics and operational pricing is suggested. Because “fake anchors” could decrease the welfare of consumers.