Joeseph Gallo, the founder of the famous wine company that bears his name, said that when he first
started selling wine right after Prohibition (laws outlawing the sale of alcohol), he poured two glasses of
wine from the same bottle and put a price of 10 cents a bottle on one and 5 cents a bottle on the other. He
let people test both and asked them which they wanted. Most wanted the 10-cent bottle, even though they
were the same wine.
What does this tell us about people?
Can you think of other areas where that may be the case?
What does this suggest about pricing?
Sample Solution