More than a penny's worth: Left-digit bias and firm pricing
Avner Strulov-Shlain asks whether retailers use prices ending in 99 because shoppers read prices from the left. Using scanner data on thousands of products across many United States chains, he estimates that shoppers react to a one-cent rise from a 99 ending as if it were a much larger increase. He then models how a retailer should price against that demand and finds that retailers, while all using 99 endings, price as if the bias were far smaller than it is, behaving more like rule-followers than optimisers and forgoing a small share of potential gross profit.
Avner Strulov-Shlain asks whether retailers use prices ending in 99 because shoppers read prices from the left. Using scanner data on thousands of products across many United States chains, he estimates that shoppers react to a one-cent rise from a 99 ending as if it were a much larger increase. He then models how a retailer should price against that demand and finds that retailers, while all using 99 endings, price as if the bias were far smaller than it is, behaving more like rule-followers than optimisers and forgoing a small share of potential gross profit.
Written from the abstract as published with the paper in its Crossref record, read 2026-10-29.
What our sources record
Recorded when this source was checked, figures included, with page references and quotation marks removed.
Strulov-Shlain, A. (2023). More than a penny's worth: Left-digit bias and firm pricing. The Review of Economic Studies, 90(5), 2612-2645. doi:10.1093/restud/rdac082 https://doi.org/10.1093/restud/rdac082