When A Penny Matters

by Patrick Appel

Ryan Sager offers some Christmas shopping tips. Among other inherent biases:

A recent study in the Journal of Consumer Research found that when pens were priced at $1.99 and $4.00, only 18% of the participants chose the higher-priced pen; but when the pens were priced at $2.00 and $3.99, 44% of the participants selected the higher-priced pen. That one-cent price drop makes the $4 pen seem a lot cheaper.

For whatever reason, we can’t take our eye off that leftmost digit. But we can at least try.