Penny Wise and Pound Foolish: The Left‐Digit Effect in Price Cognition
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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A ratio β_C/β_D < 1.00 indicates cent discounting (inattention to cents relative to whole dollars), consistent with human left-digit bias.
“A ratio β C /β D < 1.00 indicates cent discounting [i.e., inattention to cents relative to whole dollars, consistent with human left-digit bias; Thomas and Morwitz (2005)].”
From Shopping by algorithm: How agentic AI deploys human heuristics as a surrogate consumer (2026) · cites this paper as Thomas and Morwitz (2005)
Just-below pricing exploits a heuristic wherein decisionmakers focus disproportionately on the leftmost integer while ignoring fractional cents.
“Just-below pricing (e.g., pricing an item at $4.99 rather than $5.00) exploits a heuristic wherein decisionmakers focus disproportionately on the leftmost integer while ignoring fractional cents (Bizer and Schindler, 2005;Thomas and Morwitz, 2005;Kraft and Rao, 2026;Lacetera et al., 2012).”
From Shopping by algorithm: How agentic AI deploys human heuristics as a surrogate consumer (2026) · cites this paper as Thomas and Morwitz, 2005
Cites
Effects of $9 Price Endings on Retail Sales: Evidence from Field Experiments
Anderson, E. T., & Simester, D. I. (2003) · Quantitative Marketing and Economics · doi:10.1023/a:1023581927405 · Cited by 247 · see citing works
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Reference Price Research: Review and Propositions
Mazumdar, T., Raj, S. P., & Sinha, I. (2005) · Journal of Marketing · doi:10.1509/jmkg.2005.69.4.84 · Cited by 848 · see citing works
Choi, P., & Coulter, K. S. (2012) · Journal of Retailing · doi:10.1016/j.jretai.2012.04.001 · Cited by 36 · see citing works
Shopping by algorithm: How agentic AI deploys human heuristics as a surrogate consumer
Wadi, D., & Ma, Y. (2026) · arXiv · doi:10.48550/arxiv.2609.28372
- Authors
- Thomas, M., & Morwitz, V.
- Venue
- Journal of Consumer Research
- Publisher
- Oxford University Press (OUP)
- Published
- 2005-06
- Volume
- 32
- Issue
- 1
- Pages
- 54-64
- ISSN
- 0093-5301 (ISSN-L)
- 1537-5277
- OpenAlex
- W2114505339
- Cited by
- 382
- References
- 1
- Citations by year
- 2026: 25 · 2025: 27 · 2024: 23 · 2023: 21 · 2022: 25 · 2021: 20 · 2020: 28 · 2019: 23 · 2018: 21 · 2017: 18 · 2016: 15 · 2015: 19 · 2014: 18 · 2013: 19 · 2012: 20
- FWCI
- 23.26
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Journal of Consumer Research (publishedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Marketing › Consumer Market Behavior and Pricing
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Social Sciences › Business, Management and Accounting › Marketing › Consumer Behavior and Marketing Influence
- Keywords
- price perception, numerical distance, psychological distance, number magnitude, consumer judgment
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