The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

525. Unpacking Left Digit Bias with Choiceology

Aug 21, 2025

Katie Milkman, host of the Choiceology podcast and a professor at the Wharton School, teams up with Melina Palmer to explore the fascinating left digit bias. They discuss how this psychological phenomenon affects our perception of prices, revealing why $4.99 feels much cheaper than $5. The conversation dives into its real-world implications in healthcare and consumer decisions, including intriguing stories about iTunes’ pricing strategy. Listeners will learn how being aware of this bias can enhance their decision-making skills.

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ANECDOTE

99-Cent Store Success Story

David Gold built a successful 99-cent store by leaning into the charm of .99 pricing.
The chain grew to hundreds of locations before inflation made the fixed model unsustainable.

ANECDOTE

iTunes' 99¢ Gamble

Steve Jobs negotiated a $0.99 per-song price to make impulse purchases feel effortless.
iTunes sold a million songs in its opening week and helped transform music distribution.

INSIGHT

Carat Thresholds Inflate Diamond Prices

Diamond prices jump at round carat thresholds despite minimal visual difference.
Buyers can get better quality and value by choosing diamonds just below round carat bands.

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In this exciting crossover episode of The Brainy Business podcast, Melina Palmer teams up with Katy Milkman, host of the acclaimed Choiceology podcast from Charles Schwab. Together, they delve into the intriguing concept of left digit bias, a psychological phenomenon that influences how we perceive prices and make decisions.

As Melina shares her experience as a guest on Choiceology, listeners will learn about the powerful implications of left digit bias, from its impact on pricing strategies—like why $4.99 feels significantly cheaper than $5—to its effects in various domains, including healthcare and consumer behavior. The episode features compelling stories, including the history of iTunes' pricing strategy and how subtle shifts in numbers can lead to significant outcomes in both personal and professional contexts.

Throughout the episode, Melina and the guests discuss real-world applications of left digit bias, illustrating how it can affect everything from diamond purchases to medical decisions. Listeners will gain insights into how this bias shapes our choices and how being aware of it can lead to better decision-making.

In this episode:

Understand the concept of left digit bias and its influence on pricing perception.
Explore the historical context of iTunes' pricing strategy and its revolutionary impact on the music industry.
Learn how left digit bias affects medical decisions and the implications for patient care.
Discover practical tips for navigating significant purchases by leveraging left digit bias.
Gain insights into how awareness of this bias can improve decision-making in various aspects of life.

Get important links, top recommended books and episodes, and a full transcript at thebrainybusiness.com/525.

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