As humans, our brains have a hard time understanding price as an absolute. It's like if we had two kittens, and I asked you to tell me which one was heavier. You could lift them both and give me the answer without too much difficulty. You wouldn't, however, be able to tell me that one of the kittens was exactly 900g because our brains can't measure absolute values.

Want to see a version with octopuses? Watch this:

What they do measure is relativity, this year is better or worse than last year; today is hotter or cooler than the yesterday; this price is higher or lower than that one.

Big sales like Boxing Day and Black Friday are great days to look at examples of how businesses will use this to their advantage.

They use what's called anchoring. They give us a higher price, the "original" price, put a slash through it with a lower price underneath, and post a big % off sign. That higher price is now anchored in our minds and the lower price seems like we're getting more value for our dollar.

Canadian Tire does this to the extreme. There are items that say 95% off on the tag. Did they ever really sell that can opener for $75? Probably not. In fact, the "manufacturer's suggested retail price" is almost always fictional.

Aeropostale for example, always has a sale on - they don't ever actually sell their clothing for the non-sale price.

Anchoring is so effective our brains don't even care if the higher priced item is related to what we're buying. There's a restaurant in the UK that has a scooter on their menu for $15,000. That scooter has nothing to do with the food they serve, but the $15,000 price tag makes everything on the menu seem relatively cheaper.