> What is the field of economics, perhaps a category of pricing theory,
> that addresses the discrete nature of prices? Aside from the limit
Maybe psychology and economics? How about transaction costs and search
costs? My hunch is that for the most part the format of prices can b
e attributed to these factors. People price at $14.99 to make it
seem like $14 for the careless and the costs of finding the *exact*
price are high. It is also a pain to change menus except in auctions.
Also, I'd like to point out that while prices are discrete, there
are probably close to what the "real" price ought to be. basically,
the error is acceptable to both buyer and seller.
-fabio
