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

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

MPRA Paper from University Library of Munich, Germany

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 D01 D12 D22 D4 D40 D83 E03 E12 E31 E52 E58 L11 L16 L21 L81 M21 M31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind, nep-mac and nep-mon
Date: 2019-01-03
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Handle: RePEc:pra:mprapa:91360