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The 99 cents puzzle

April 25, 2011

Many fun-filled discussions (and economics papers) have been spent on the observation that prices often end in .99, trying to come up with game-theoretic explanations, etc…So it was to my surprise that one morning while getting a Latte at our corner (locally-owned) coffee-shop I was asked to pay 2.01, two dollars and one cent. How could that be? Then again the teller had been very eager to pull out a penny from a small tray, strategically positioned next to the tips jar. I was so pleased by the fact that he had done so, that I was immediately put in a better mood and in fact decided to dump a bunch of loose change in the jar. Or maybe I was just pleased by the smell of coffee.

From → Economics

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