According to a BBC News article, "Why is a 99p tag so attractive?", there is such thing as the "99 effect", researched by Robert Schindler. He theorizes that "people overweigh the left hand number. When a price changes from a $30 to a $29.99, the change from three to two makes more of a difference than the value of that money". He likens this difference to when a 39-year-old turns 40 and the birthday feels like a tremendous leap.
This practice originated, according to Schindler, from the same practice of department stores in the late 1880s to communicate discount or the impression that things are on sale - even when they are not.
Nick Gladding, another contributor to the article, is skeptical that consumers are fooled the the "99 effect". However, as an avid shopper myself who knows basic math, I think there is some truth to it. Everyone wants a bargain, and if the price tag looks cheaper, then it makes sense that we associate the product with being a bargain.
I wonder how easy it is to be a smart consumer, with retailers pulling out all the stops to lure in costumers?
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