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End of 9-Endings and Price Perceptions

Listed author(s):
  • Haipeng (Allan) Chen

    ()

    (Mays Business School, Texas A&M University, USA)

  • Daniel Levy

    ()

    (Department of Economics, Bar-Ilan University, Israel; Department of Economics, Emory University, USA; The Rimini Centre for Economic Analysis, Italy)

  • Avichai Snir

    ()

    (Department of Banking and Finance, Netanya Academic College, Israel)

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.

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File URL: http://www.rcfea.org/RePEc/pdf/wp17-04.pdf
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Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 17-04.

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Date of creation: Jan 2017
Handle: RePEc:rim:rimwps:17-04
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  1. Mark Stiving, 2000. "Price-Endings When Prices Signal Quality," Management Science, INFORMS, vol. 46(12), pages 1617-1629, December.
  2. Stiving, Mark & Winer, Russell S, 1997. " An Empirical Analysis of Price Endings with Scanner Data," Journal of Consumer Research, Oxford University Press, vol. 24(1), pages 57-67, June.
  3. Eric Anderson & Duncan Simester, 2003. "Effects of $9 Price Endings on Retail Sales: Evidence from Field Experiments," Quantitative Marketing and Economics (QME), Springer, vol. 1(1), pages 93-110, March.
  4. Eric Anderson & Nir Jaimovich & Duncan Simester, 2015. "Price Stickiness: Empirical Evidence of the Menu Cost Channel," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 813-826, October.
  5. Anil K Kashyap, 1995. "Sticky Prices: New Evidence from Retail Catalogs," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 245-274.
  6. Schindler, Robert M & Kirby, Patrick N, 1997. " Patterns of Rightmost Digits Used in Advertised Prices: Implications for Nine-Ending Effects," Journal of Consumer Research, Oxford University Press, vol. 24(2), pages 192-201, September.
  7. Manoj Thomas & Vicki Morwitz, 2005. "Penny Wise and Pound Foolish: The Left-Digit Effect in Price Cognition," Journal of Consumer Research, Oxford University Press, vol. 32(1), pages 54-64, 06.
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