EconPapers    
Economics at your fingertips  
 

The Price Tag Illusion

Fernando Chague () and Bruno Giovannetti ()
Authors registered in the RePEc Author Service: Rodrigo De-Losso

No 2017_31, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: We find that a stock price fall in itself induces more individuals to buy the stock. Used to temporary sales in the goods market, individuals have the illusion that buying a stock at a lower price is also a better deal, ignoring the fact that a price fall usually reflects negative news. We call this illusion the “Price Tag Illusion” (PTI). To identify the PTI, we use two distinct events which generate “fictitious price falls”. The first is the mechanical stock price adjustment on ex-dividend dates. The second is the fluctuation of stock prices around integer numbers. The PTI can cause severe losses to individuals in the stock market

Keywords: individual investors; price tag illusion; contrarian behavior (search for similar items in EconPapers)
JEL-codes: G11 G12 G40 (search for similar items in EconPapers)
Date: 2017-11-16
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.repec.eae.fea.usp.br/documentos/Chague_DeLosso_Giovannetti_31WP.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spa:wpaper:2017wpecon31

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers, Department of Economics from University of São Paulo (FEA-USP) Contact information at EDIRC.
Bibliographic data for series maintained by Pedro Garcia Duarte ().

 
Page updated 2021-10-11
Handle: RePEc:spa:wpaper:2017wpecon31