This paper is concerned with the situation in which a profit-maximizing monopolist faces

consumers that are diverse not only in their preferences but also in their levels of bounded

rationality. The behavioral phenomenon considered here is the attraction effect when choices

are made across categories. Using the standard second-degree price discrimination model,

the optimal menu of contracts that screens consumers' types is characterized. The benefit of

discriminating consumers based on their preference and cognitive limitation is always higher

than its cost. In other words, the monopolist can exploit consumers and increase his profit

with this contract. The model provides a possible explanation for the apparent puzzle why

one may observe that the same quality products are priced differently under different labels.

Moreover, this contract is welfare improving.