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Penny Wise and Pound Foolish: The Left-Digit Effect in Price Cognition

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  • Manoj Thomas
  • Vicki Morwitz
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    Abstract

    Through five experiments, we provide a cognitive account of when and why nine-ending prices are perceived to be smaller than a price one cent higher. First, this occurs only when the leftmost digits of the prices differ (e.g., $2.99 vs. $3.00). Second, the left-digit effect also depends on the numerical and psychological distances between the target price and a competing product's price. The closer the two prices being compared, the more likely is the left-digit effect. Third, the left-digit effect is not restricted to the domain of prices; it also manifests with other multidigit numbers. (c) 2005 by JOURNAL OF CONSUMER RESEARCH, Inc..

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    File URL: http://www.journals.uchicago.edu/doi/pdf/10.1086/429600
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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Consumer Research.

    Volume (Year): 32 (2005)
    Issue (Month): 1 (06)
    Pages: 54-64

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    Handle: RePEc:ucp:jconrs:v:32:y:2005:i:1:p:54-64

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    Web page: http://www.journals.uchicago.edu/JCR/

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    Cited by:
    1. Raghubir, Priya, 2006. "An information processing review of the subjective value of money and prices," Journal of Business Research, Elsevier, vol. 59(10-11), pages 1053-1062, October.
    2. Snir, Avichai & Levy, Daniel & Gotler, Alex & Chen, Haipeng (Allan), 2012. "Not All Price Endings Are Created Equal: Price Points and Asymmetric Price Rigidity," MPRA Paper 42252, University Library of Munich, Germany.
    3. DAMAY, Coralie, 2007. "Mémorisation des prix par les enfants : Que nous apprennent leurs erreurs de rappel ?," Les Cahiers de Recherche 871, HEC Paris.

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