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End of 9-Endings and Price Perceptions

Haipeng (Allan) Chen, Daniel Levy () and Avichai Snir ()
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Avichai Snir: Bar-Ilan University

No 2017-02, Working Papers from Bar-Ilan University, Department of Economics

Abstract: 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 parliament has passed a law prohibiting the use of non 0-ending prices. We find that one year after 9-ending prices have disappeared, 90-ending prices acquired the same status as 9-ending prices had before the law was passed. 90-ending prices became the new psychological price points. The retailers and the shoppers both reacted to the regulatory intervention optimally, which has eliminated the regulation’s intended effect.

Keywords: 9-ending prices; psychological price points; sticky prices; rigid prices; price recall; price control; price regulation; integer constraint (search for similar items in EconPapers)
JEL-codes: E31 L16 K20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mac
Date: 2017-02
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Working Paper: End of 9-Endings and Price Perceptions (2017) Downloads
Working Paper: End of 9-Endings and Price Perceptions (2017) Downloads
Working Paper: End of 9-Endings and Price Perceptions (2017) Downloads
Working Paper: End of 9-Endings and Price Perceptions (2017) Downloads
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