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

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  • Manoj Thomas
  • Vicki Morwitz

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. (c) 2005 by JOURNAL OF CONSUMER RESEARCH, Inc..

Suggested Citation

  • Manoj Thomas & Vicki Morwitz, 2005. "Penny Wise and Pound Foolish: The Left-Digit Effect in Price Cognition," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 32(1), pages 54-64, June.
    • Handle: RePEc:oup:jconrs:v:32:y:2005:i:1:p:54-64
    DOI: 10.1086/429600
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