Left-digit effect
Also known as: Left-digit bias
We judge a price mostly by its first digit, so $3.00 dwarfs $2.99.
What it means
A cognitive bias in which people give disproportionate weight to the leftmost digit of a number when evaluating magnitude, so a one-cent difference that changes the leading digit feels far larger than a one-cent difference that does not. Because attention and encoding focus on the first digit, $2.99 is perceived as closer to $2 than to $3, which is the engine behind charm pricing. The effect appears beyond retail — in odometer-based used-car prices and in numerical judgments generally — and grows when people process numbers quickly. It matters because it reveals that perceived price is built from digits, not values.
Examples
A used car at 79,900 miles seems much lower-mileage than one at 80,100, far beyond the tiny real gap.
A subscription at £9.99 a month reads as nine pounds and change; at £10.00 it becomes a tenner a month, and the tenner is what people balk at.
A house listed at £499,950 sits in buyers' minds in the four hundreds; at £500,000 it is a half-million-pound house — on a gap of fifty pounds.
First described in Thomas & Morwitz (2005).