Working papers, Department of Economics, WU (Wirtschaftsuniversität Wien)
Causes, consequences, and cures of myopic loss aversion - An experimental investigation
() and Matthias Sutter
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.
JEL-Codes: C91; D80; G11; (follow links to similar papers)
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