Cognitive Scaffold

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MENTAL MODEL · M1245

Ratner Effect

Ratner Effect
BusinessHigh supportProduct Management
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

Jewelry tycoon Gerald Ratner joked in a speech that his own products were "crap" because they were cheaper than a prawn sandwich. This caused the company's market value to evaporate by £500 million instantly.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

Respect brand reputation. No matter how cost-effective your product is, never publicly disparage your own products or mock your customers. Building a brand takes decades; destroying it takes one sentence.

anchor

Anchor fast decisions

The Ratner Effect refers to the phenomenon where consumers' purchase intention decreases when they perceive a product's price as extremely low, because low prices trigger negative inferences about quality. It reveals that price not only measures cost but also signals quality.

MINIMUM ACTION

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Gerald_RatnerZH · Explicit
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