Comparables Pricing

60 Pages Posted: 26 May 2016 Last revised: 5 Jun 2018

See all articles by Justin Murfin

Justin Murfin

Cornell SC Johnson College of Business

Ryan Pratt

Brigham Young University

Date Written: July 11, 2017


We explore the role of comparables in price formation. Using data on corporate loans, we exploit the lag between loans' closing dates and their inclusion in a widely-used comparables database to identify the causal effect of past transactions on new transaction pricing. We find that comparables pricing is an important determinant of individual loan spreads, but a failure to account for the overlap in information across loans leads to pricing mistakes. A comparable's influence grows with repeated use through its impact on intervening transactions. Moreover, market conditions prevailing at the time a comparable was priced also unduly influence subsequent loans.

Keywords: Comparables, Observational Learning, Herding, Credit Markets

JEL Classification: G20, G21, G10, G30

Suggested Citation

Murfin, Justin and Pratt, Ryan, Comparables Pricing (July 11, 2017). 6th Miami Behavioral Finance Conference, Available at SSRN: or

Justin Murfin

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

Ryan Pratt (Contact Author)

Brigham Young University ( email )

640 TNRB
Provo, UT 84602
United States
(801) 422-1222 (Phone)

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