HUANG Teng, JIN Xuejun：Lucky Number Preference, Mantissa Pricing and Price Stickiness ——Evidence From the Internet Prices

Abstract：This paper uses the price data from “T-mall” to examine the existence of lucky number preferences on China's retail market and its impact on price stickiness. The results show that: (1) There are mainly three types of mantissa pricing in China: mantissa pricing of 8, mantissa pricing of 9, and convenient pricing, where the most favored price point is 8, while number 4 is avoided, indicating that lucky number preferences have a significant impact on the mantissa pricing models. (2) According to the Markov transfer dynamic analysis results, the price point of 8 is most stable and it is highly probable that the price-ending without 8 in the current period is likely to be changed to that with 8 in the following period. (3) The average change for 8-ending prices is greater than that for non-8-ending prices and the average duration for which 8-ending prices remain unchanged is longer than that for non-8-ending prices. (4) Based on Logit model, the empirical results show that the price point of 8 has a significantly positive impact on price stickiness, meaning that “lucky prices” have strong stickiness. Compared to the mantissa pricing of 9 and convenience prices, the mantissa pricing of 8 contributes more to price stickiness. During holiday seasons, retailers are more concerned about avoiding unlucky numbers, which further indicates that the impact of cultural background on price stickiness. This study provides new empirical evidence regarding the sources of price stickiness.

Key words： Lucky Number    Mantissa Pricing    Price Stickiness

source:Finance & Trade Economics ,No.12,2014