A Publisher Needed One of Its Best-Selling Authors to Fly

question 131

Multiple Choice

A publisher needed one of its best-selling authors to fly from his home in Richmond, Virginia to Chicago, Illinois in order to start a publicity campaign for the author's new book. The author could have taken a flight to Detroit, Michigan, changed planes, and then flew on to Chicago for about half the price of a non-stop flight from Richmond to Chicago. However, he chose the non-stop flight. He became less price sensitive because of:

• A) The availability of substitutes.
• B) The fact that someone else was paying the bill.
• C) The significance of the end benefit.
• D) The size of the total expenditure.
• E) The sunken investment he had made.

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Definitions:

Clustering Illusion

The cognitive bias of seeing a pattern in random events where none actually exists.

Professional Fund Managers

Individuals or entities responsible for making investment decisions and managing investment portfolios on behalf of investors.

Outperform

To do better than others or than a benchmark, often used in the context of investment performance.

Frame Dependence

The influence of presentation or context on decision-making outcomes.