What’s in an odd number?

I used to collect wine (back when I still drank alcohol), and as part of that, I sometimes went to fine wine auctions. And from time to time, you come across a lot where someone tries to auction off 11 bottles. If you know that a case has 12 bottles, you can guess what kind of signal that sends to bidders…

Odd numbers convey information, and typically, it is not the best kind of information. Market makers know that orders with odd numbers of stocks or odd volume (e.g. buy 11 stocks of company X or sell $4,650 of shares Y) tend to come from less sophisticated investors. And I can assure you they would never try to profit off these investors by changing their bid or ask price. That never happens because market makers are kind-hearted people who want to foster equity market participation across the public rather than maximise the profits they are making for their employer in the short term.

Similarly, lenders don’t adjust the interest rate of a consumer loan depending on whether the borrower asks for a round-number loan or an odd amount. That one is true, though a study by Xiaowen Hu and Andreas Kraft shows that they would be better off if they adjusted their loan interest depending on the amount borrowed.

The study used anonymised data from Lending Club, the peer-to-peer consumer lending platform, to examine whether the loan amount tells you something about the credit risk of the borrower. And indeed, people who borrowed odd amounts were more likely to default on the loan than people who asked for round amounts. This was true across time, across consumer credit scores and even across loan amounts. People who borrowed amounts that were multiples of 10, 100, 100, 1,000, etc., were less likely to default on their loans.

Default rate by loan amount

Source: Hu and Kraft (2026)

What is going on there? Well, think back to the guy trying to auction off 11 bottles of wine. What likely happened is that this person bought a case of 12 bottles, opened one, found it was off and then tried to get rid of the other 11.

In the case of odd lot trading by retail investors, they probably buy a few shares or an odd volume because that is all the money they have available. They are trying to max out their investment portfolio and inadvertently give away the limitations of their means.

And when applying for a loan, people who are more desperate to get a loan will try to maximise the loan amount while staying within the budget they can afford to pay on the loan every month. But of course, if they max out the monthly payment to the absolute limit they can afford, even a small unforeseen emergency can mean that they no longer can afford their monthly repayments. And hence, they may have to default on the loan.

In short, applying for an odd amount is a sign that the person is already in some distress, even if it doesn’t show up in the credit score or other indicators of credit risk.