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Reevaluating evidence on myopic loss aversion : aggregate patterns versus individual choices
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Blavatskyy, Pavlo and Pogrebna, Ganna (2009) Reevaluating evidence on myopic loss aversion : aggregate patterns versus individual choices. Theory and Decision, Vol.68 (No.1-2). pp. 159-171. doi:10.1007/s11238-009-9143-5 ISSN 0040-5833.
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Official URL: http://dx.doi.org/10.1007/s11238-009-9143-5
Abstract
Investors who are more willing to accept risks when evaluating their investments less
frequently are said to exhibit myopic loss aversion (MLA). Several recent experimental
studies found that, on average, subjects bet significantly higher amounts on a risky lottery
when they observe only a cumulative outcome of several realizations of the lottery (long
evaluation period). In this paper we reexamine these empirical findings by analyzing
individual rather than aggregate choice patterns. The behavior of the majority of subjects
is inconsistent with the hypothesis of MLA: they bet an intermediate fraction of their
initial endowment and these bets, on average, are not significantly different across two
treatments with short and long evaluation period. We discuss several alternative
explanations of this finding, including the Fechner model of random errors and the
financial asset pricing model.
Item Type: | Journal Article | ||||
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Subjects: | H Social Sciences > HB Economic Theory | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Loss aversion, Risk | ||||
Journal or Publication Title: | Theory and Decision | ||||
Publisher: | Springer | ||||
ISSN: | 0040-5833 | ||||
Official Date: | 23 April 2009 | ||||
Dates: |
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Volume: | Vol.68 | ||||
Number: | No.1-2 | ||||
Page Range: | pp. 159-171 | ||||
DOI: | 10.1007/s11238-009-9143-5 | ||||
Status: | Peer Reviewed | ||||
Access rights to Published version: | Restricted or Subscription Access | ||||
Date of first compliant deposit: | 17 December 2015 | ||||
Date of first compliant Open Access: | 17 December 2015 |
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