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Previous outcomes and reference dependence: A meta study of repeated investment tasks with and without restricted feedback

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  • Hopfensitz, Astrid

Abstract

When investment is repeated, previous outcomes (winning/losing) as well as the current budget level (gain/loss domain) influence decisions. The first is related to the so-called "gamblers fallacy". The second to value function relative to some reference point. Both effects have been extensively studied, however not their interaction. We present a meta-study of five experiments initially conducted to investigate myopic-loss-aversion. We observe that investment is related to the number of previous winning rounds as well as to the current budget position relative to a reference point. These effects persist when the analysis is extended to settings with restricted flexibility concerning investment.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16096.

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Date of creation: 25 Jun 2009
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Handle: RePEc:pra:mprapa:16096

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Keywords: reference point; gamblers fallacy; meta study; experiment; risk taking; myopic loss aversion;

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Cited by:
  1. Hopfensitz, Astrid & Wranik, Tanja, 2009. "How to adapt to changing markets: experience and personality in a repeated investment game," MPRA Paper 17835, University Library of Munich, Germany.

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