His PhD dissertation included one of the first papers to analyze firm-level transactions prices. Using data from mail order retailers he studied the way prices are set finding that they change about once a year, the size of price change is very irregular for a given item, the last digit of the price influences the probability that the price will change and the same item often will have some periods when the price may be constant for more than a year and at other times may change by only one or two percent. These findings contradict the predictions of the simplest “menu cost” pricing models that suppose that prices are only changed when the benefit of doing so exceeds a fixed given cost of changing them (because the presence of both small changes and long period of no changes imply that sometime this cost must be small and other times must be larger.) They have subsequently been confirmed in numerous other studies using larger data sets from other time periods and other countries.
