Macroeconomics

Theory and

Percentage of Managers

Brief Description

Who Accepted Theory

Coordination failure: 

60.6

Firms hold back on price changes, waiting for others to go first 

Cost-based pricing with lags: 

55.5

Price increases are delayed until costs rise

Delivery lags, service, etc.:

54.8

Firms prefer to vary other product attributes, such as delivery lags, service, or 

product quality

Implicit contracts:

50.4

Firms tacitly agree to stabilize prices, perhaps out of “fairness” to customers

Nominal contracts:

35.7

Prices are fixed by explicit contracts

Costs of price adjustment:

30.0

Firms incur costs of changing prices

Procyclical elasticity:

29.7

Demand curves become less elastic as they shift in

Pricing points:

24.0

Certain prices (like $9.99) have special psychological significance

Inventories:

20.9

Firms vary inventory stocks instead of prices

Constant marginal cost:

19.7

Marginal cost is flat and markups are constant

Hierarchical delays:

13.6

Bureaucratic delays slow down decisions

Judging quality by price:

10.0

Firms fear customers will mistake price cuts for reductions in quality

Source: Tables 4.3 and 4.4, Alan S. Blinder, “On Sticky Prices: Academic Theories Meet the Real World,’’ in N. G. Mankiw,

ed., Monetary Policy (Chicago: University of Chicago Press, 1994), 117–154.

Theories of Price Stickiness