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Myopic Loss Aversion : Information Feedback vs. Investment Flexibility

Author

Listed:
  • Bellemare, C.

    (Tilburg University, Center For Economic Research)

  • Krause, M.

    (Tilburg University, Center For Economic Research)

  • Kroger, S.

    (Tilburg University, Center For Economic Research)

  • Zhang, C.

    (Tilburg University, Center For Economic Research)

Abstract

We experimentally disentangle the effect of information feedback from the effect of investment flexibility on the investment behavior of a myopically loss averse investor.Our findings show that varying the information condition alone suffices to induce behavior that is in line with the hypothesis of Myopic Loss Aversion.

Suggested Citation

  • Bellemare, C. & Krause, M. & Kroger, S. & Zhang, C., 2004. "Myopic Loss Aversion : Information Feedback vs. Investment Flexibility," Discussion Paper 2004-32, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:cabd47ac-5617-4a28-9669-4e4f785dfae6
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    References listed on IDEAS

    as
    1. Langer, Thomas & Weber, Martin, 2003. "Does Binding of Feedback Influence Myopic Loss Aversion? An Experimental Analysis," CEPR Discussion Papers 4084, C.E.P.R. Discussion Papers.
    2. Uri Gneezy & Jan Potters, 1997. "An Experiment on Risk Taking and Evaluation Periods," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 631-645.
    3. Shlomo Benartzi & Richard H. Thaler, 1995. "Myopic Loss Aversion and the Equity Premium Puzzle," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 73-92.
    4. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    information; investment;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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