Psychological Pricing Hypotheses

A pricing strategy where consumers perceive just-below prices (prices slightly below a round number, such as \$19.99) as lower than they actually are.

University of Minnesota - Twin Cities

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- Psychological Pricing
- High Octane Fuel
- Supermarkets
- Pharmaceutical Advertising

Examples of Market Manipulation

Hanson, Jon D. and Kysar, Douglas A., Taking Behavioralism Seriously: The Problem of Market Manipulation (1999). New York University Law Review, Vol. 74, p. 632, 1999, Harvard Public Law Working Paper No. 08-54, Available at SSRN: https://ssrn.com/abstract=1288182

Taking Behavioralism Seriously: Some
Evidence of the Problem of Market
Manipulation

Psychological Pricing

Oil company advertising has led many consumers to conclude that such premium fuel
will make their car start more easily, get better mileage, and last longer. Oil industry officials acknowledge, however, that only vehicles with high-performance engines (less than ten percent of the market) actually benefit from high-octane fuel. The Federal Trade Commission has been challenging this practice for some time, but consumers still continue to purchase high-octane fuel at levels far above what is beneficial for most vehicles.

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