Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/156685
Authors: 
Snir, Avichai
Levy, Daniel
Chen, Haipeng
Year of Publication: 
2017
Citation: 
[Journal:] Economics Letters [ISSN:] 0165-1765 [Place:] Amsterdam [Publisher:] Elsevier [Issue:] forthcoming
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.
Subjects: 
9-ending prices
psychological price points
price recall
price perception
sticky prices
rigid prices
price rigidity
price flexibility
price stickiness
level effect
left-digit effect
image effect
right-digit effect
integer constraint
price control
price regulation
JEL: 
E31
L16
K20
D40
D83
L81
M21
M31
Document Type: 
Article

Files in This Item:
File
Size
193.24 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.