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Causes, consequences, and cures of myopic loss aversion - an experimental investigation

Fellner, Gerlinde and Sutter, Matthias (2008) Causes, consequences, and cures of myopic loss aversion - an experimental investigation. Department of Economics Working Paper Series, 116. Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business, Vienna.

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Abstract

We examine in an experiment the causes, consequences and possible cures of myopic loss aversion (MLA) for investment behaviour under risk. We find that both, investment horizons and feedback frequency contribute almost equally to the effects of MLA. Longer investment horizons and less frequent feedback lead to higher investments. However, when given the choice, subjects prefer on average shorter investment horizons and more frequent feedback. Exploiting the status quo bias by setting a long investment horizon or low feedback frequency as a default turns out to be a successful behavioural intervention that increases investment levels. (author´s abstract)

Item Type: Paper
Keywords: myopic loss aversion / risk / investment / experiment
Classification Codes: JEL C91, D80, G11 ; RVK QK 820
Divisions: Departments > Volkswirtschaft
Depositing User: Repository Administrator
Date Deposited: 21 Jan 2008 19:47
Last Modified: 19 May 2015 17:22
URI: http://epub.wu.ac.at/id/eprint/244

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