End of 9-Endings, Price Recall, and Price Perceptions

Avichai Snir, Daniel Levy () and Haipeng (Allan) Chen ()
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Avichai Snir: Department of Banking & Finance, Netanya Academic College, Israel

Working Paper series from Rimini Centre for Economic Analysis

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.

Keywords: 9-ending prices; psychological price points; price recall; price perception; sticky prices; rigid prices; price rigidity; price flexibility; price stickiness; level effect; left-digit effect; image effect; right-digit effect; integer constraint; price control; price regulation (search for similar items in EconPapers)
JEL-codes: D40 D83 E31 K20 L16 L81 M21 M31 (search for similar items in EconPapers)
Date: 2017-04
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (16)

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http://www.rcea.org/RePEc/pdf/wp17-08.pdf

Related works:
Journal Article: End of 9-endings, price recall, and price perceptions (2017)
Journal Article: End of 9-Endings, Price Recall, and Price Perceptions (2017)
Working Paper: End of 9-endings, price recall, and price perceptions (2017)
Working Paper: End of 9-Endings, Price Recall, and Price Perceptions (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:17-08

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