Abstract
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.
Acknowledgement
An earlier version of the study was presented in the 2006 JCIS conference.
Notes
1Participants answered one problem at a time and could not return to their previous answers while answering the current problem.