Left-Digit Bias, Quality Choice, and Channel Coordination

• 成果类型: Article; Early Access
• 署名作者: Peng, Xuefeng; Zhong, Zemin (Zachary)
• 署名单位: Chinese Academy of Sciences; University of Science & Technology of China, CAS; University of Toronto
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2025.00771
• 发表日期: 2026
• 关键词: left-digit bias; behavioral pricing; Quality choice; shrinkflation; channel coordination

摘要

Left-digit bias in price perception has been widely documented. We study how it affects firms' joint pricing and quality choices. The bias increases quality at interior prices but decreases quality at 99-ending prices. At 99-ending price points, the bias discourages price adjustment, leading firms to absorb cost shocks through quality changes and thereby, contributing to shrinkflation (quality reductions with nominal prices held fixed). In channels, the bias can either exacerbate double marginalization via a prisoner's dilemma or-because retailers are rigid at 99-ending prices-induce wholesale price adjustments that may strengthen coordination. When manufacturers choose quality, for empirically relevant bias magnitudes, the bias can generate 99-ending retail pricing and raise total channel profits; its coordination effects depend on whether the induced move to 99-ending prices is upward or downward. In decentralized channels, consumer surplus can sometimes increase alongside total channel profit.