Lucky lots and unlucky investors
The number 8 is considered lucky under the Chinese culture. This paper tries to examine whether investors hold such superstitious belief in the Hong Kong Stock Exchange. Using the transaction level data, we first show that more intense net buying occurs at 8-ending lots. Next, we seek favorable evidence in support of financial complexity hypothesis and informed trading hypothesis, both of which are effective in expounding the prevalence of this biased trading behavior. Finally, we find that traders’ learning by means of information acquisition is able to alleviate the lucky-8 effect on superstitious traders.
KeywordsLot sizes Lucky numbers Trading biases Learning effects
JEL ClassificationG12 G40
We thank Cheng-Few Lee (Editor) and anonymous referees for their helpful comments and suggestions. Chen acknowledges the Start-up Research Grant (SRG2018-00115-FBA) support from University of Macau. Ko thanks the financial support of the Multi-Year Research Grant (MYRG2017-00086-FBA) to University of Macau. All errors remain our own responsibility.
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