Effect of price quoting on financial assets price

DOI

10.2991/jcis.2006.179How to use a DOI?

Keywords

Behavioral Finance, Experiment, Myopic Loss Aversion, WTP, WTA.

Abstract

Stock options are usually sold in bundles of 100 units, and their price can be quoted either per unit or per bundle. In this paper, the effect of different methods of quoting financial asset prices on the subjective value of a contract was examined experimentally. In particular, we examined differences in subjects’ Willingness-To-Pay (WTP) and Willingness-To-Accept (WTA) for financial assets depending upon whether prices are quoted per unit or per bundle. We found that subjects bid (ask) a higher price when prices are quoted per unit than when they are quoted per bundle. The results indicated that different quoting methods affect the bidding price for risky assets. These results can have important implications for trading on financial markets.

Copyright

© 2006, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Tal Shavit
AU  - Shosh Shahrabani
AU  - Uri Benzion
PY  - 2006/10
DA  - 2006/10
TI  - Effect of price quoting on financial assets price
BT  - Proceedings of the 9th Joint International Conference on Information Sciences (JCIS-06)
PB  - Atlantis Press
SP  - 577
EP  - 579
SN  - 1951-6851
UR  - https://doi.org/10.2991/jcis.2006.179
DO  - 10.2991/jcis.2006.179
ID  - Shavit2006/10
ER  -