AN EMPIRICAL-ANALYSIS OF PRICE ENDINGS WITH SCANNER DATA

Several consumer behavior theories have been offered to explain the pr eponderance of prices that end in the digit 9. This study attempts to incorporate these proposed behaviors into the implicit utility functio n of consumer choice models, resulting in both a more accurate tool fo r managerial decision making and additional insights into how consumer s actually behave toward price endings. An attempt is made to compensa te for both level effects (those effects in which consumers may undere stimate the value of a price) and image effects (those effects in whic h consumers may infer meaning from the right-hand digits). The models are estimated using scanner panel data for two frequently purchased pr oducts, tuna and yogurt. The results support the importance of account ing for the digits in consume: choice models, providing evidence for b oth image effects and level effects.