To be fair, my research is decades old at this point.

Some slight ramdom paper reading, back in my uni days. Though I’ve ran across it via other sources over the years since. Unfortunately I don’t have any links to hand though.

It might better be described as people put numbers into categories. Most people have a 10-20 category. 19.99 fits. 20.00 gets bumped up to the next box. It’s a sub/semi conscious thing. If we use our higher thought process, we can deal with the numbers. That takes effort however, by default, we chunk. The price just abuses a common rollover point most people share.

It’s a subconscious thing. It’s how our brain is wired. It’s a bit like advertising. Most people don’t like ads. However, when confronted my 2 similar products, we will go with the familiar one. The source of that familiarity is irrelevant, ads make it familiar, just the same as using it, or a recommendation.

It’s possible to override both of these effects, but that requires a level of conscious effort. I can almost guarantee you’ve been caught by both at different times. You just didn’t notice (since noticing would allow you to correct).

Basically, $19.99 is in the category “under $20”. $20.00 is in “over $20”. Without conscious correction, you act on this.

It was originally to force the cashier to open the till.

Say an item was $20. If the customer paid with a $20 note, then the cashier could, intheory, pocket it, without it showing up on the rocords. If it was $19.99 they needed to open the till to get a cent out. This meant it was recorded, and so the till wouldn’t balance.

Most people round down. Their brain locks on to the 1 of 19.99, and approximates it to 10.00. We need to actively counter this to see it as 20.00. It’s a skill most people don’t apply all the time, and a number can’t even do.

Once you can do it reliably, it’s mind-boggling that others can’t, but it’s still a learnt skill, that needs to be applied.