An Experiment on Risk Taking and Evaluation Periods
Does the period over which individuals evaluate outcomes influence their investment in risky assets? Results from this study show that the more frequently returns are evaluated, the more risk averse investors will be. The results are in line with the behavioral hypothesis of 'myopic loss aversion,' which assumes that people are myopic in evaluating outcomes over time and are more sensitive to losses than to gains. The results have relevance for the equity premium puzzle and also for the marketing strategies of fund managers. Copyright 1997, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Volume (Year): 112 (1997)
Issue (Month): 2 (May)
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- R. Mehra & E. Prescott, 2010.
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- Shlomo Benartzi & Richard H. Thaler, 1993.
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NBER Working Papers
4369, National Bureau of Economic Research, Inc.
- Benartzi, Shlomo & Thaler, Richard H, 1995. "Myopic Loss Aversion and the Equity Premium Puzzle," The Quarterly Journal of Economics, MIT Press, vol. 110(1), pages 73-92, February.
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- Daniel Kahneman & Dan Lovallo, 1993. "Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk Taking," Management Science, INFORMS, vol. 39(1), pages 17-31, January.
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