3.66 Price cuts on athletic shoes.
Stores advertise price reductions to attract customers. What type of price cut is most attractive? Market researchers prepared ads for athletic shoes announcing different levels of discounts (20%, 40%, or 60%). The student subjects who read the ads were also given “inside information” about the fraction of shoes on sale (50% or 100%). Each subject then rated the attractiveness of the sale on a scale of 1 to 7.