While there is no apparent reason for loan spreads to cluster at certain numbers, we find that approximately 70 % of bank loans have round-yard spreads (i.e., multiples of 25 basis points). We hypothesize that dominant banks implicitly collude using round yards as focal pricing points when negotiating with borrowers. Tacit collusion leads to higher spreads and total costs of round yard priced loans than of non-round yard priced loans. Consistent with our tacit collusion hypothesis, dominant banks round up loans to multiple yards rather than rounding them down. Moreover, round-yard pricing is more prevalent among lower-quality and nonrepeat borrowers.

We use lottery jackpot winnings in a neighborhood as an exogenous shock to investing in stocks. We find that retail investors whose brokerages are near the stores that sell winning tickets buy more stocks than their counterparts after the shock. These purchases lead to lower returns. We use a survey to identify the behavioral factors like regretfulness and probability weighting that are the main drivers of our findings. Moreover, these investors tend to buy more lottery-like stocks, but the shock does not affect their selling decisions. Finally, we perform several falsification tests and robustness checks and find consistent results.