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Alice would probably not want to pay $1,000 for a loaf that she prefers only slightly to the $1 loaf. She'd likely be willing to pay $1.05 or $1.10 for it. And Bob would be willing to pay $2 or $3 or maybe even $4 since he wants it so badly.
I did not intend that to be taken literally. I picked an extreme example to make the effect intuitively obvious, not because it was realistic.
If you think the effect doesn't exist, or is too small to be worth mentioning, at realistic levels, then that seems worth saying. But it doesn't seem very interesting to say that my example was unrealistic.
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