Research in neuropsychology shows that individuals process small and large numbers differently. Small numbers are processed on a linear scale, while large numbers are processed on a logarithmic scale. In this paper, we show that financial analysts process small prices and large prices...

Bid and ask reservation prices, posted by market makers on price-driven financial markets, are studied in the framework of the rank-dependent expected utility model. We study the inventory effect and prove that bid (ask) prices are increasing and concave (convex) functions of the quantity to be...

The disposition effect is a well-established phenomenon in the empirical and experimental financial literature. It leads to sell winners too early and to hold losers too long. In this paper, we show that the consciousness of the disposition effect by investors lead them to require a greater risk...