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

Avichai Snir, Daniel Levy () and Haipeng (Allan) Chen ()

Economics Letters, 2017, vol. 155, issue C, 157-163

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/perception; Sticky/rigid prices; Level/left-digit effect; Image/right-digit effect (search for similar items in EconPapers)
JEL-codes: E31 K20 L16 M31 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
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)
Working Paper: End of 9-Endings, Price Recall, and Price Perceptions (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:155:y:2017:i:c:p:157-163

DOI: 10.1016/j.econlet.2017.04.001

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