Do Markets Think about Stocks Proportionally?

Lior Cohen

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: I examine whether investors perceive higher-priced stocks as riskier despite identical percentage price changes. Using survey evidence, the study investigates whether nominal stock prices influence decisions to sell during market downturns. The findings suggest that investors exhibit non-proportional reasoning, attributing significance to nominal price movements rather than proportional changes.

Keywords: Non-proportional reasoning; Behavioral Finance; stock price illusion; market inefficiency; investor behavior (search for similar items in EconPapers)
JEL-codes: D91 G11 G14 G41 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:342228

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