IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v116y2012i1p20-22.html
   My bibliography  Save this article

The effect of short-term information on long-term investment: An experimental study

Author

Listed:
  • Benzion, Uri
  • Krupalnik, Lena
  • Rosenfeld, Ahron
  • Shahrabani, Shosh
  • Shavit, Tal

Abstract

We present a multi-trial experiment that extends the classic experiment of Thaler et al. (1997) by adding short-term information to long-term investment. The allocation to the risky asset is reduced in the long-term, when we add short-term information.

Suggested Citation

  • Benzion, Uri & Krupalnik, Lena & Rosenfeld, Ahron & Shahrabani, Shosh & Shavit, Tal, 2012. "The effect of short-term information on long-term investment: An experimental study," Economics Letters, Elsevier, vol. 116(1), pages 20-22.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:1:p:20-22
    DOI: 10.1016/j.econlet.2012.01.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176512000080
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2012.01.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bellemare, Charles & Krause, Michaela & Kroger, Sabine & Zhang, Chendi, 2005. "Myopic loss aversion: Information feedback vs. investment flexibility," Economics Letters, Elsevier, vol. 87(3), pages 319-324, June.
    2. Uri Gneezy & Jan Potters, 1997. "An Experiment on Risk Taking and Evaluation Periods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 631-645.
    3. Richard H. Thaler & Amos Tversky & Daniel Kahneman & Alan Schwartz, 1997. "The Effect of Myopia and Loss Aversion on Risk Taking: An Experimental Test," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 647-661.
    4. Zion, Uri Ben & Erev, Ido & Haruvy, Ernan & Shavit, Tal, 2010. "Adaptive behavior leads to under-diversification," Journal of Economic Psychology, Elsevier, vol. 31(6), pages 985-995, December.
    5. De Bondt, Werner F M & Thaler, Richard H, 1990. "Do Security Analysts Overreact?," American Economic Review, American Economic Association, vol. 80(2), pages 52-57, May.
    6. Chevalier, Judith & Ellison, Glenn, 1997. "Risk Taking by Mutual Funds as a Response to Incentives," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1167-1200, December.
    7. Erik R. Sirri & Peter Tufano, 1998. "Costly Search and Mutual Fund Flows," Journal of Finance, American Finance Association, vol. 53(5), pages 1589-1622, October.
    8. Uri Gneezy & Arie Kapteyn & Jan Potters, 2003. "Evaluation Periods and Asset Prices in a Market Experiment," Journal of Finance, American Finance Association, vol. 58(2), pages 821-838, April.
    9. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    10. repec:dgr:kubcen:200432 is not listed on IDEAS
    11. Sutter, Matthias, 2007. "Are teams prone to myopic loss aversion? An experimental study on individual versus team investment behavior," Economics Letters, Elsevier, vol. 97(2), pages 128-132, November.
    12. Gul, Faruk, 1991. "A Theory of Disappointment Aversion," Econometrica, Econometric Society, vol. 59(3), pages 667-686, May.
    13. David E. Bell, 1985. "Disappointment in Decision Making Under Uncertainty," Operations Research, INFORMS, vol. 33(1), pages 1-27, February.
    14. Graham Loomes & Robert Sugden, 1986. "Disappointment and Dynamic Consistency in Choice under Uncertainty," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(2), pages 271-282.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Florian Zimmermann, 2015. "Clumped or Piecewise? Evidence on Preferences for Information," Management Science, INFORMS, vol. 61(4), pages 740-753, April.
    2. Epper, Thomas & Fehr-Duda, Helga, 2017. "A Tale of Two Tails: On the Coexistence of Overweighting and Underweighting of Rare Extreme Events," Economics Working Paper Series 1705, University of St. Gallen, School of Economics and Political Science.
    3. Thomas Epper & Helga Fehr-Duda, 2012. "The missing link: unifying risk taking and time discounting," ECON - Working Papers 096, Department of Economics - University of Zurich, revised Oct 2018.
    4. Laura Hueber & Rene Schwaiger, 2021. "Debiasing Through Experience Sampling: The Case of Myopic Loss Aversion," Working Papers 2021-01, Faculty of Economics and Statistics, Universität Innsbruck.
    5. Gerlinde Fellner & Matthias Sutter, 2009. "Causes, Consequences, and Cures of Myopic Loss Aversion - An Experimental Investigation," Economic Journal, Royal Economic Society, vol. 119(537), pages 900-916, April.
    6. Hueber, Laura & Schwaiger, Rene, 2022. "Debiasing through experience sampling: The case of myopic loss aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 87-138.
    7. Schwaiger, Rene & Hueber, Laura, 2021. "Do MTurkers exhibit myopic loss aversion?," Economics Letters, Elsevier, vol. 209(C).
    8. Glätzle-Rützler, Daniela & Sutter, Matthias & Zeileis, Achim, 2015. "No myopic loss aversion in adolescents? – An experimental note," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 169-176.
    9. Stefan Zeisberger & Thomas Langer & Martin Weber, 2012. "Why does myopia decrease the willingness to invest? Is it myopic loss aversion or myopic loss probability aversion?," Theory and Decision, Springer, vol. 72(1), pages 35-50, January.
    10. Marianne Andries & Valentin Haddad, 2020. "Information Aversion," Journal of Political Economy, University of Chicago Press, vol. 128(5), pages 1901-1939.
    11. Lee, Boram & Veld-Merkoulova, Yulia, 2016. "Myopic loss aversion and stock investments: An empirical study of private investors," Journal of Banking & Finance, Elsevier, vol. 70(C), pages 235-246.
    12. Francis Larson & John A. List & Robert D. Metcalfe, 2016. "Can Myopic Loss Aversion Explain the Equity Premium Puzzle? Evidence from a Natural Field Experiment with Professional Traders," NBER Working Papers 22605, National Bureau of Economic Research, Inc.
    13. John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2017. "Does Aggregated Returns Disclosure Increase Portfolio Risk Taking?," The Review of Financial Studies, Society for Financial Studies, vol. 30(6), pages 1971-2005.
    14. Veld, Chris & Veld-Merkoulova, Yulia V., 2008. "The risk perceptions of individual investors," Journal of Economic Psychology, Elsevier, vol. 29(2), pages 226-252, April.
    15. Hopfensitz, Astrid, 2009. "Previous outcomes and reference dependence: A meta study of repeated investment tasks with and without restricted feedback," MPRA Paper 16096, University Library of Munich, Germany.
    16. Brice Corgnet & Roberto Hernán González, 2023. "On The Appeal Of Complexity," Working Papers 2312, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    17. Emily Haisley & Romel Mostafa & George Loewenstein, 2008. "Myopic risk-seeking: The impact of narrow decision bracketing on lottery play," Journal of Risk and Uncertainty, Springer, vol. 37(1), pages 57-75, August.
    18. van der Heijden, Eline & Klein, Tobias J. & Müller, Wieland & Potters, Jan, 2012. "Framing effects and impatience: Evidence from a large scale experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 701-711.
    19. Mayhew, Brian W. & Vitalis, Adam, 2014. "Myopic loss aversion and market experience," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 113-125.
    20. Clist, Paul & D’Exelle, Ben & Verschoor, Arjan, 2021. "An endowment effect for risk levels: Evidence from a Ugandan lab," Journal of Economic Behavior & Organization, Elsevier, vol. 182(C), pages 297-310.

    More about this item

    Keywords

    Myopic loss aversion; Regret; Multi-periods;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:116:y:2012:i:1:p:20-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.