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Zero-Ending Prices, Cognitive Convenience, and Price Rigidity

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

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Abstract: We assess the role of cognitive convenience in the popularity and rigidity of 0 ending prices in convenience settings. Studies show that 0 ending prices are common at convenience stores because of the transaction convenience that 0 ending prices offer. Using a large store level retail CPI data, we find that 0 ending prices are popular and rigid at convenience stores even when they offer little transaction convenience. We corroborate these findings with two large retail scanner price datasets from Dominicks and Nielsen. In the Dominicks data, we find that there are more 0 endings in the prices of the items in the front end candies category than in any other category, even though these prices have no effect on the convenience of the consumers check out transaction. In addition, in both Dominicks and Nielsens datasets, we find that 0 ending prices have a positive effect on demand. Ruling out consumer antagonism and retailers use of heuristics in pricing, we conclude that 0 ending prices are popular and rigid, and that they increase demand at convenience settings, not only for their transaction convenience, but also for the cognitive convenience they offer.

Date: 2022-10
New Economics Papers: this item is included in nep-com and nep-mon
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http://arxiv.org/pdf/2210.00488 Latest version (application/pdf)

Related works:
Journal Article: Zero-ending prices, cognitive convenience, and price rigidity (2022) Downloads
Journal Article: Zero-Ending Prices, Cognitive Convenience, and Price Rigidity (2022) Downloads
Working Paper: Zero-Ending Prices, Cognitive Convenience, and Price Rigidity (2022) Downloads
Working Paper: Zero-Ending Prices, Cognitive Convenience, and Price Rigidity* (2022) Downloads
Working Paper: Zero-Ending Prices, Cognitive Convenience, and Price Rigidity (2022) Downloads
Working Paper: Zero-Ending Prices, Cognitive Convenience, and Price Rigidity (2022) Downloads
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