Why Prices End in .99 — The Left Digit Effect

Researchers studying cigarette taxes find out what retailers already know — consumers tend to ignore everything after the decimal point:

“The areas where we saw the biggest changes were those with left-digit transitions, or prices where the whole dollar price went up,” MacKillop said. Compared to the effect of a pack price increase from $5.60 to $5.80, the decrease in cigarette consumption from $5.80 to $6 was four times larger.

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