It's running at full resolution, relax. A few years ago Apple decided that the default setting for all 13.3" 2560x1600 Retina displays should be a scaled resolution in order to fit more content on screen.
The way to translate "Looks like" is that the size of text, photos, etc. on screen is the same as it would be on a non-Retina display of the "Looks like" resolution. It does not mean you're operating at that resolution.
Since all retina Macs made so far implement @2x retina (some iPhones do @3x), what you're getting with "Looks like 1400x900" is everything rendered at 2x 1400x900, or 2800x1800. The 2800x1800 image is then downscaled to 2560x1600 since that's what your display's native res is.
If you want no scaling, choose the option which gives "Looks like 1280x800". You probably won't like it as much as "Looks like 1400x900" - text and images will be larger and you won't be able to fit as much on screen.
