Superstition Everywhere

In Chinese culture, the digit 8 is considered lucky and the digit 4 unlucky. We find that this numerological superstition has a significant impact across China’s stock, bond, foreign exchange, and commodity futures markets, affecting asset prices in both the primary and secondary markets. The superstition effect, that is, asset prices ending in a lucky (unlucky) digit are far more (less) frequent than expected by chance, is prevalent across finance markets. We show that this phenomenon is driven by two mechanisms: sophisticated investors’ reliance on superstition as an anchor to manage ambiguity, and the overoptimism of unsophisticated investors. While the superstition effect does not lead to any systematic mispricing for assets traded primarily by sophisticated investors, it is closely associated with overpricing for assets heavily traded by unsophisticated investors.

This paper was accepted by Will Cong, finance.

Funding: J. (J.) Chang received financial support from the National Natural Science Foundation of China [Grant 72573148].

Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2025.01449.