Why are so many goods priced ending with .99? An economist who believes everyone is rational would say to price everything at even numbers to maximise profit because $20.00 and $40.00 scream luxury and quality. Additionally, attention is a resource, so perhaps if you, a customer, were to perform a cost-benefit analysis, the cent difference would not be worth your time and effort.

So why then do businesses and customers still choose .99 over an even number? The answer can be found through behavioural economics.

According to behavioural economics, businesses don’t always profit maximise and real people don’t make the most rational decisions. The above example follows left digit bias: businesses lean into tricking customers brains that items are a lower price. And for customers: attention being scarce means you will choose 19.99 over 20.00. Why bother read the rest of the price? 19 is less than 20.

Behavioral economics is the study of the psychological (e.g. cognitive, behavioral, affective, social) factors involved in the decisions of individuals or institutions, and how these decisions deviate from those implied by traditional economic theory.[1][2]