Notice anything weird about the above graph of used car sales prices?
In a survey of over 22 million used car sales at wholesale auctions, researchers found that purchase prices drop rather abruptly for every 10,000 miles on the odometer. Their analysis shows that a used car’s price does not smoothly decrease with higher mileage. Instead, buyers over-value cars until mileage hits a 10,000-mile marker, at which point bidding prices significantly drop. For example, a 79,900-mile car on average sold for $210 more than an 80,100-mile car, but only $10 less than a 79,800-mile car.
The researchers attribute the mispricing to “left-digit bias”. Buyers try to simplify the information available to them by only focusing on what they deem most relevant. And this bias represents $2.4 billion worth of mispricing.
So, sell your car when the odometer reads 49K miles, not 50K.
To get occasional notifications when we write blog posts, sign up for our email list.
Aug. 1, 2013 · 53,129 views
In 1959, Volvo invented the 3 point seat belt we use today. Then they gave the design away for all other car manufacturers to use for free.
April 16, 2014 · 28,410 views
Stanford researchers say that attractive people are more likely to endorse hierarchies -- and believe that they belong at the top of them.