Table 1. Theories of price clustering... | Emerald Publishing

Table 1.

Theories of price clustering

Name	Nature of the theory	Explanation for the preference of certain numbers in financial prices	References
Resolution hypothesis	Economic	Investors prefer round prices because they are unsure about the asset’s true fundamental value	Ball et al. (1985)
Negotiation hypothesis	Economic	Investors prefer round prices to minimize the costs associated with negotiations	Harris (1991)
Attraction hypothesis	Cognitive	Investors prefer round prices to minimize cognitive processing costs	Gottlieb and Kalay (1985), Goodhart and Curcio (1991)
Cultural hypothesis	Cultural	Investors prefer numbers that have a especially positive symbolism in their culture	Brown et al. (2002), Cai et al. (2007), Wagner and Jamsawang (2014)

Name	Nature of the theory	Explanation for the preference of certain numbers in financial prices	References
Resolution hypothesis	Economic	Investors prefer round prices because they are unsure about the asset’s true fundamental value	Ball et al. (1985)
Negotiation hypothesis	Economic	Investors prefer round prices to minimize the costs associated with negotiations	Harris (1991)
Attraction hypothesis	Cognitive	Investors prefer round prices to minimize cognitive processing costs	Gottlieb and Kalay (1985), Goodhart and Curcio (1991)
Cultural hypothesis	Cultural	Investors prefer numbers that have a especially positive symbolism in their culture	Brown et al. (2002), Cai et al. (2007), Wagner and Jamsawang (2014)

Source: Own elaboration