Discuss the reasoning of behavioral economics

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Reference no: EM132207621

Question: Using the reasoning of behavioral economics, which of the reasons below might best explain why companies offer a 30-day-no-questions-asked return policy? Such a policy may convince a customer who otherwise might not make a purchase to take the product home and then the product:

a) becomes part of the customer's endowment at which point loss aversion kicks in.

b) becomes a decoy and the customer decides to purchase multiple units of the good.

c) purchase price becomes a sunk cost and the customer correctly ignores it and views the good as free.

d) becomes an anchor upon which the customer inadequately adjusts for quality and ends up keeping the good even though it's inferior to other alternatives.

Reference no: EM132207621

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