TY - JOUR
T1 - Effect of price quoting on financial asset prices
T2 - An experimental analysis
AU - Shavit, Tal
AU - Shahrabani, Shosh
AU - Benzion, Uri
PY - 2010/8
Y1 - 2010/8
N2 - Stock options are usually sold in bundles of 100 units, and their price can be quoted either per unit or per bundle. In this article, 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 participants' Willingness-To-Pay and Willingness-To-Accept for financial assets depending upon whether prices are quoted per unit or per bundle. We found that participants 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.
AB - Stock options are usually sold in bundles of 100 units, and their price can be quoted either per unit or per bundle. In this article, 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 participants' Willingness-To-Pay and Willingness-To-Accept for financial assets depending upon whether prices are quoted per unit or per bundle. We found that participants 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.
UR - http://www.scopus.com/inward/record.url?scp=77954840477&partnerID=8YFLogxK
U2 - 10.1080/17446540902845487
DO - 10.1080/17446540902845487
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AN - SCOPUS:77954840477
SN - 1350-4851
VL - 17
SP - 1219
EP - 1222
JO - Applied Economics Letters
JF - Applied Economics Letters
IS - 12
ER -