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NumericalDecision Processing causing stock price clustering?

Author

Listed:
  • Bodo Vogt

    (Bielefeld University, Institut f³r mathematische Wirtschaftsforschung (IMW), Bielefeld, Germany)

  • Andreas Uphaus

    (Bielefeld University, Institut f³r mathematische Wirtschaftsforschung (IMW), Bielefeld, Germany)

  • Wulf Albers

    (Bielefeld University, Institut f³r mathematische Wirtschaftsforschung (IMW), Bielefeld, Germany)

Abstract

The stock price clustering phenomenon has been studied in the context of numerical perception and response. The numerical response process of the theory of prominence models how persons generate numerical responses if they have diffuse numerical information (know a range of reasonable alternatives). These predictions are compared with empirical data (the inside quotes of 30 stocks traded on the IBIS computer exchange in March/April 1993). The numerical response process predicts the principal structure of the data. A similarity was observed between the quotes and a laboratory experiment in which the diffuse numerical information has been controlled.

Suggested Citation

  • Bodo Vogt & Andreas Uphaus & Wulf Albers, 2001. "NumericalDecision Processing causing stock price clustering?," Homo Oeconomicus, Institute of SocioEconomics, vol. 18, pages 229-240.
    • Handle: RePEc:hom:homoec:v:18:y:2001:p:229-240
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    Cited by:

    1. Pope, Robin & Selten, Reinhard & Kube, Sebastian, 2009. "Nominalist Heuristics and Economic Theory," Bonn Econ Discussion Papers 17/2009, University of Bonn, Bonn Graduate School of Economics (BGSE).
    2. Pope, Robin & Selten, Reinhard & Kube, Sebastian & von Hagen, Jürgen, 2009. "Prominent Numbers, Indices and Ratios in Exchange Rate Determination and Financial Crashes: in Economists’ Models, in the Field and in the Laboratory," Bonn Econ Discussion Papers 18/2009, University of Bonn, Bonn Graduate School of Economics (BGSE).

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