DOES RELATIVE THINKING EXIST IN REAL-WORLD SITUATIONS? A FIELD EXPERIMENT WITH BAGELS AND CREAM CHEESE*

Many experiments show that consumers consider relative price differences even when only absolute price differences are relevant from an economic perspective, a phenomenon that was denoted "relative thinking. " These experiments, however, were conducted using hypothetical questions. To test whether the relative thinking bias also exists in real-world situations, a field experiment where subjects could purchase either a bagel or a bagel with cream cheese was conducted. The monetary addition for the cream cheese was kept constant ($0.20) in both treatments, but the bagel's price varied ($0.05 in one treatment and $0.30 in the other). Relative thinking then implies that more people should add the cream cheese when the bagel's price i