Cognitive Scaffold

Preparing your thinking workspace

arrow_back_ios_new
MENTAL MODEL · M3366

Sticky Prices

Sticky Prices
BusinessHigh supportEconomics
Included
account_tree

Version 1.0.0 · Updated 2026-07-28

CORE DEFINITION

In economics, nominal rigidity, also referred to as price stickiness or wage stickiness, describes a situation in which a nominal price is slow to adjust or resistant to change. Complete nominal rigidity occurs when a price remains fixed in nominal terms for a relevant period of time. For example, the price of a good may be contractually set at $10 per unit for an entire year, regardless of changes in demand or supply conditions.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

In economics, nominal rigidity, also referred to as price stickiness or wage stickiness, describes a situation in which a nominal price is slow to adjust or resistant to change. Complete nominal rigidity occurs when a price remains fixed in nominal terms for a relevant period of time. For example, the price of a good may be contractually set at $10 per unit for an entire year, regardless of changes in demand or supply conditions.

anchor

Anchor fast decisions

Menu costs, contracts, coordination failures, and information asymmetry cause price/wage adjustments to lag, especially downward stickiness; this prevents markets from clearing instantly, leading to short-term imbalances (unemployment, surplus).

MINIMUM ACTION

In progress 0/2

Practice this model in one real situation:

Check to track your progress (stored locally)
Learning progress0%
account_treeGenealogyexpand_more
menu_bookReferencesexpand_more

Source support: Explicit

  • link
    en.wikipedia.orghttps://en.wikipedia.org/wiki/Nominal_rigidityZH · Explicit
    verified

RELATED MODELS

Related model

Grey Swan

Refers to events that have a very low probability of occurrence, but if they occur, have a huge impact, and to some extent are foreseeable (not completely unpredictable, i.e., not black swans).

arrow_forwardRelated model

I, Pencil

Leonard Read uses the production network behind a pencil to illustrate how knowledge dispersed across people and industries is combined through specialization and exchange.

arrow_forwardRelated model

Fordism

Fordism describes an economic and social system based on industrialized and standardized mass production and mass consumption. This concept, named after Henry Ford, is widely used in sociology, economics, and management studies, particularly concerning production, working conditions, consumption, and other related phenomena in the 20th century.

arrow_forward