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El Sehity, T, Hoelzl, E and Kirchler, E (2005)

Price developments after a nominal shock: Benford's Law and psychological pricing after the euro introduction

International Journal of Research in Marketing 22(4), 471-480.

ISSN/ISBN: 0167-8116 DOI: Not available at this time.



Abstract: ABSTRACT: Retail managers use psychological pricing to make the prices of goods appear to be just below a round number. The euro introduction in 2002, with its various exchange rates, distorted existing nominal price patterns while at the same time retaining real prices. We studied consumer prices before and after the introduction of the euro by using Benfordís Law as a benchmark for price adjustments. Results indicate the usefulness of this benchmark for detecting irregularities in prices, and a clear trend towards psychological pricing after the nominal shock of the euro introduction. In addition, the tendency towards psychological prices results in different inflation rates in dependence of the price pattern


Bibtex:
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Reference Type: Journal Article

Subject Area(s): Economics, Psychology