Reading Report 3 Please read Huber, Payne, and Puto (1982) and answer the following questions. Your answers should be concise and organized in bullet points, and explained in your own words that are understandable to someone who has not read the article. Please type up your answers, print out the report, and bring it to class. Preferred length is within 1 page, single spaced. 1. What are “asymmetrically dominated alternatives”? How should a decoy be constructed? 2. Provide your own example of a set of products with an asymmetrically dominated alternative. 3. Examine the experiment design closely, is there anything questionable?

Reading Report 3

There exist various strategies that firms employ to raise sales. One of these policies involves the addition of commodities whose sole purpose is to shun customers from them and market their competing products. The plan, known as asymmetrically dominated alternatives, serves to ensure that customers end up buying the targeted good. The good acts as a decoy to lure the buyers in a specific direction. For instance, sellers increase the price of an item to ensure the other that is slightly higher to attract buyers. However, they have to create decoys that are close to the commodities that the firm wishes to increase revenue.
Asymmetrically dominated alternatives exist in various market models. For example, mobile phones offer an illustration of such a scenario. Thus, assuming there are three types of phones with different prices and memory, there is a possibility of one being a decoy. The table below shows that customers will buy the phone with six gigabytes and worth $ 2,000. The theory being clients will despise the competitor since it has less memory. On the other hand, the decoy is unfavorable since it has less memory and yet more expensive than the target.