Producers’ preferences for round number prices

Abstract

The purpose of this study was to determine if a preference for round prices exists in the wheat market and how wheat sales react to price movements around whole‐dollar amounts. The results show round prices are slightly more prevalent than non round prices, and transactions increase when price moves above a whole‐dollar amount. While such predictable behavior could be exploited by speculators in other markets, the effect is not large enough to merit concern in the market studied here.