What is the main issue with deceptive reference prices?

Deceptive reference prices primarily create confusion among consumers because they can mislead shoppers about the true value of a product. When businesses advertise inflated reference prices, which are often not based on actual selling prices, they create an illusion of savings when the product is offered at a lower price. This tactic can distort consumers' perceptions of price fairness and value, making it challenging for them to determine what constitutes a reasonable price.

By presenting an artificially high reference price, marketers can create a sense of urgency or encourage impulse buying by suggesting buyers are getting a great deal. However, this can erode trust as consumers may feel manipulated once they discover the discrepancy. Understanding this manipulation is crucial for consumers to make informed decisions and protect themselves from potentially exploitative pricing strategies.

In contrast, options suggesting that deceptive reference prices accurately reflect market conditions, increase competition, or promote transparency fail to recognize the essence of what makes a reference price "deceptive" in the first place. They do not acknowledge the core issue of misrepresentation that leads to consumer confusion.