Abstract
Prices that end with 9, also known as psychological price points, are common, comprising about 70% of the retail prices. They are also more rigid than other prices. We take advantage of a natural experiment to document an emergence of a new price ending that has the same effects as 9-endings. In January 2014, the Israeli government passed a new regulation prohibiting the use of non 0-ending prices, bringing an end to 9-ending prices. We find that seven months after 9-ending prices have disappeared, 90-ending prices acquired the same status as 9-ending prices had before the new regulation was adopted. Thus, 90-ending prices became the new psychological price points, partially eliminating the regulation's intended effect.
Original language | English |
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Pages (from-to) | 157-163 |
Number of pages | 7 |
Journal | Economics Letters |
Volume | 155 |
DOIs | |
State | Published - Jun 1 2017 |
Bibliographical note
Publisher Copyright:© 2017 Elsevier B.V.
Keywords
- 9-ending prices
- Image/right-digit effect
- Level/left-digit effect
- Price recall/perception
- Psychological price points
- Sticky/rigid prices
ASJC Scopus subject areas
- Finance
- Economics and Econometrics