| By: |
Daniel Levy (Bar-Ilan University);
Avichai Snir |
| Abstract: |
We assess the role of cognitive convenience in the popularity and rigidity of
0-ending prices in convenience settings. Studies show that 0-ending prices are
common at convenience stores because of the transaction convenience that
0-ending prices offer. Using a large store-level retail CPI data, we find that
0-ending prices are popular and rigid at convenience stores even when they
offer little transaction convenience. We corroborate these findings with two
large retail scanner price datasets from Dominick’s and Nielsen. In the
Dominick’s data, we find that there are more 0-endings in the prices of the
items in the front-end candies category than in any other category, even
though these prices have no effect on the convenience of the consumers’
check-out transaction. In addition, in both Dominick’s and Nielsen’s datasets,
we find that 0-ending prices have a positive effect on demand. Ruling out
consumer antagonism and retailers’ use of heuristics in pricing, we conclude
that 0-ending prices are popular and rigid, and that they increase demand at
convenience settings, not only for their transaction convenience, but also for
the cognitive convenience they offer. |
| Keywords: |
Cognitive Convenience, Transaction Convenience, Price Rigidity, Price Stickiness, Sticky Prices, Rigid Prices, 0-Ending Prices, Round Prices, Convenient Prices, 9-Ending Prices, Just Below Prices, Psychological Prices, Price Points |
| JEL: |
E31 L16 D90 E70 M30 |
| Date: |
2022–10 |
| URL: |
http://d.repec.org/n?u=RePEc:biu:wpaper:2022-07&r=neu |