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

Manoj Thomas and Vicki Morwitz
Journal of Consumer Research
Vol. 32, No. 1 (June 2005), pp. 54-64
Published by: Oxford University Press
DOI: 10.1086/429600
Stable URL: http://www.jstor.org/stable/10.1086/429600
Page Count: 11
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Penny Wise and Pound Foolish: The Left‐Digit Effect in Price Cognition
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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.

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