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Not all price endings are created equal: Price points and asymmetric price rigidity

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

Journal of Monetary Economics, 2020, vol. 110, issue C, 33-49

Abstract: We document an asymmetry in the rigidity of 9-ending prices relative to non-9-ending prices. Consumers have difficulty noticing higher prices if they are 9-ending, or noticing price-increases if the new prices are 9-ending, because 9-endings are used as a signal for low prices. Price setters respond strategically to the consumer-heuristic by setting 9-ending prices more often after price-increases than after price-decreases. 9-ending prices, therefore, remain 9-ending more often after price-increases than after price-decreases, leading to asymmetric rigidity: 9-ending prices are more rigid upward than downward. These findings hold for both transaction-prices and regular-prices, and for both inflation and no-inflation periods.

Keywords: Asymmetric price adjustment; Sticky/rigid prices; 9-ending prices; Psychological prices; Price points; Regular/Sale prices (search for similar items in EconPapers)
JEL-codes: C91 C93 D80 E31 L16 M31 (search for similar items in EconPapers)
Date: 2020
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Related works:
Journal Article: Not all price endings are created equal: Price points and asymmetric price rigidity (2020) Downloads
Working Paper: Not All Price Endings Are Created Equal: Price Points and Asymmetric Price Rigidity (2019) Downloads
Working Paper: Not all price endings are created equal: Price points and asymmetric price rigidity (2019) Downloads
Working Paper: Not all price endings are created equal: Price points and asymmetric price rigidity (2019) Downloads
Working Paper: Not all price endings are created equal: Price points and asymmetric price rigidity (2019) Downloads
Working Paper: Not All Price Endings Are Created Equal: Price Points and Asymmetric Price Rigidity (2014) Downloads
Working Paper: Not All Price Endings Are Created Equal: Price Points and Asymmetric Price Rigidity (2012) Downloads
Working Paper: Not All Price Endings Are Created Equal: Price Points and Asymmetric Price Rigidity (2012) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:110:y:2020:i:c:p:33-49

DOI: 10.1016/j.jmoneco.2019.01.005

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