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)
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)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
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 ().