Left-Digit Bias at Lyft

• 成果类型: Article
• 署名作者: List, John A.; Muir, Ian; Pope, Devin; Sun, Gregory
• 署名单位: University of Chicago; National Bureau of Economic Research; University of Chicago; Washington University (WUSTL)
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdad014
• 发表日期: 2023
• 页码: 3186-3237
• 关键词: price-endings; MARKET; SALIENCE; taxation; demand

摘要

Left-digit bias (or 99-cent pricing) has been discussed extensively in economics, psychology, and marketing. Despite this, we show that the rideshare company, Lyft, was not using a 99-cent pricing strategy prior to our study. Based on observational data from over 600 million Lyft sessions followed by a field experiment conducted with 21 million Lyft passengers, we provide evidence of large discontinuities in demand at dollar values. Approximately half of the downward slope of the demand curve occurs discontinuously as the price of a ride drops below a dollar value (e.g. $14.00 to $13.99). If our short-run estimates persist in the longer run, we calculate that Lyft could increase its profits by roughly $160M per year by employing a left-digit bias pricing strategy. Our results showcase the robustness of an important behavioral bias for a large, modern company and its persistence in a highly competitive market.