Black-Cat Markets: Do Superstitious Beliefs Change?

Abstract

This paper examines the extent and persistence of numerological superstitions. We consider the unique setting of the housing market in China and focus on the numbers “4” and “8” because of the strong negative and positive beliefs associated with these numbers, respectively, in the Chinese culture. We use an extensive dataset for new apartments purchased during 2004-2015 to assess pricing patterns based on the floor level and unit number. We find that numerological preferences and aversions associated with superstitious beliefs have non-negligible price effects and they can be considerably altered after the occurrence of an earthquake that affects risk perceptions.

Keywords: Superstitious beliefs, extreme events, housing market, agents' behavior, numerological superstitions, China