This is why.
I do it out of spite when someone undercuts me by 1 gil because I find that incredibly obnoxious. I know that's a failing on my part but I just can't help it. When I see someone undercut me by a single gil it incites incredible animosity within me and the only way to defuse it is to undercut in big chunks. When it gets too low (and if it hasn't sold yet), I yank it and let the 1gil undercutter have the sale at a much lower than expected price point then.
I know its incredibly silly on my part. I just find the whole undercut by 1 gil so frustratingly obnoxious I just can't help but retaliate in the only way I can. I also avoid buying things that have been undercut by 1gil and go to the next higher priced one. Paying that one gil more gives me such a sense of satisfaction that its well worth it.