End of 9-endings, price recall, and price perceptions

Avichai Snir, Daniel Levy, Haipeng (Allan) Chen

Research output: Contribution to journalArticlepeer-review

11 Scopus citations

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 languageEnglish
Pages (from-to)157-163
Number of pages7
JournalEconomics Letters
Volume155
DOIs
StatePublished - 1 Jun 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

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