 Limited attention, salient anchor, and the modified MAX effect: Evidence from Taiwan’s stock marketZi-Mei Wang and Donald Lien The North American Journal of Economics and Finance, 2023, vol. 67, issue C Abstract: The literature documents that investors overweighing the right-tail probability pursue positively skewed assets, leading to lottery-like stocks overpriced. We find that the lottery anomaly primarily exists among stocks further away from their 52-week high prices. After attention-grabbing events with gambling features, inattentive retail investors become aware of certain stocks’ gambling traits and then net buy more lottery-like stocks, which further promotes the lottery anomaly. However, when such stocks are near their 52-week high price, retail investors tend to place little weight on the likelihood that the stock price will rise beyond the 52-week high, thereby reducing the skewness preference. Overall, our findings suggest that the perception of the 52-week high price as a price ceiling influences skewness preference, and that investor attention is the main determinant of whether anchoring bias affects skewness preference. Keywords: Anchoring bias; Investor attention; Modified MAX effect; Recency bias; 52-week high (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:67:y:2023:i:c:s106294082300027x DOI: 10.1016/j.najef.2023.101904 Access Statistics for this article The North American Journal of Economics and Finance is currently edited by Hamid Beladi More articles in The North American Journal of Economics and Finance from Elsevier |
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