Bitcoin Forum

I find a bit funny when people put imaginary barriers to the price of btc (*) on their speculations. Why people say $50 instead of 53 or 51.3 or even sqrt(3210)?
It's like they find the 0 positioned into the least significant digit as something relevant...
Maybe some people says 50 as an approximation, but what would you put in your ask price: $97 or $100?
I would love to see how many people choose "nice numbers" (like 100) instead of primary number (97)

What could happen if we all start using any other numerical system, like hexadecimal? I don't think we are going to say "Hey, it will break at 0x3C, I'm sure!". And what the number of digits would mean? it would be less accurate than now?  ::)

Does anybody knnows if there is there any study about this kind of stuff?

cheers!

EDIT: (*) to be fair this happen on any market/society, not only bitcoin

EDIT 2:
I found a some research's about this topic:
http://mro.massey.ac.nz/bitstream/handle/10179/2695/02_whole.pdf?sequence=1 (a mbs thesis)
http://www.cepr.org/pubs/Bulletin/meets/1180.htm
https://en.wikipedia.org/wiki/Psychological_pricing

I like primary numbers. Last time I bought was at 22.21 EUR.

I don't think it's all just habit or psychology. If you say 49.72 you need some specific reason for the precision, just like if you said 50.00, but no one (outside of mytho-chartalists) claims that precision so they use even numbers to indicate that it's just a rough guess.

I rely on psychological pricing a lot.
It doesn't happen only with prices, but also with years.
Almost every time it is a year ending in zero, and especially "milestones" such as the beggining of a decade, century or millennium, there is a speculation of doomsday.
I believe in that case it might be related to apophenia and also in the way we learn the numeric system, our language system and some bad heuristics.

Lets say $1399, in written it is one thousand three hundred ninety nine.
And lets say $1401, in written it is one thousand four hundred one.
If someone is mathematically inclined and can take numbers objectively, and is asked to check a price from the newspaper and finds $1399, he would realize it is just 1 dollar away from $1400 so he would report back "oh it costs just about fourteen hundred dollars". That is how you synthesise the information.
Now, if someone who is less mathematically inclined, he would synthesize verbally instead of numerically. When he finds $1399 instead of synthesising numerically he would simplify it truncating it verbally "one thousand three hundred--", and report back "thirteen hundred dollars".

That is my hypothesis, and considering on how our brain is organized I would even say that the latter could be the characteristic of those who are more right brain dominant.

Humans are just a lot dumber than we let ourselves think :P

I don't care what you guys say.  Six easy payments of 39.99 is a steal!

and what about asks/bids or spot rates? I think (baseless beliefs ;) ) that people are more inclined to type eg 100 than 97

I would expect to actually see another resistance or even a crash at 99.
There is some resistance to round numbers, and 100 is a big milestone.

I would expect the same psychology that goes into the $.99 rather $1.00 theory would back this.  Digit hopping scares those that can conceptualize it.  It excites others.

Well, now people is happy, for some reason that I can't really explain...
(mtgox $51.4)

In China, sellers often abbreviate their prices -- e.g. "四百多“ -- "four-hundred-odd". It often turns out that the "four-hundred-odd" can be "490". However this usually either results in the buyer trying to bargain them down, or walking away.

1 BTC equals 1 gram of gold

(ie. $51.4 is the approxiomate price of 1 gram of gold in US dollars)

So a psychological barrier as well, but not a round number.

What you are talking about is an emergent phenomenon.
People looking for reasons to buy or sell.
If the trader doesn't have a rational prediction about future price he will usually go for 'feeling' and then feelings of familiarity begin to have an effect. Round numbers feel more special to us because of extra connotations we have in our memory. 100 is 10 x 10 and you have 10 fingers! woo! 100 is also easy to remember because you only need the first two numbers of the numerical alphabet.
50 is of course 100 / 2 :)
So these numbers give extra 'feeling' to a number.
What will happen is that the masses of blind traders will try to feel out their strategy.
They notice a statistical change around the nice numbers and their memory gets triggered enforcing the feeling of that number having significance. This process then snowballs up to a certain point.

So it's mostly about unjustified feelings about certain numbers in a social feedback loop.
Which in the end makes them justified in their own right.

I would say it is far far worse.
Almost anything we think and do is pretty irrational.
The only rationale for most of human activities is that we are specifically humans.

All of culture is specific to humans.
We still need to eat and reproduce and stuff. But when that is done we start making stuff up.
What is rational about having fun while watching two groups of men run after a ball?
What is rational about going to the moon?
What is rational about over farming your land?
The answer to most of such questions is "It is not rational, it is just how our brain happens to work".

We humans are full of biases and prejudice and other irrational stuff. It has shaped our societies in almost every way.