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Limits to Myopic loss aversion and learning

Author

Listed:
  • Morais, Marcleiton Ribeiro
  • Schoti, Camila
  • Resende, José Guilherme de Lara
  • Tabak, Benjamin Miranda

Abstract

This paper investigates the effects of limiting the evaluation period in a typical experiment to measure myopic loss aversion (MLA). We corroborate previous results and found that the aggregation effect had diminishing returns. This indicates that there is a point where limiting investor access to the results of the portfolio ceases to yield a significant MLA. We also found evidence of a learning process occurring during the experiment.

Suggested Citation

  • Morais, Marcleiton Ribeiro & Schoti, Camila & Resende, José Guilherme de Lara & Tabak, Benjamin Miranda, 2023. "Limits to Myopic loss aversion and learning," Economics Letters, Elsevier, vol. 229(C).
    • Handle: RePEc:eee:ecolet:v:229:y:2023:i:c:s016517652300215x
    DOI: 10.1016/j.econlet.2023.111190
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    References listed on IDEAS

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    1. Bellemare, Charles & Krause, Michaela & Kroger, Sabine & Zhang, Chendi, 2005. "Myopic loss aversion: Information feedback vs. investment flexibility," Economics Letters, Elsevier, vol. 87(3), pages 319-324, June.
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    6. Francis Larson & John List & Robert Metcalfe, 2016. "Can Myopic Loss Aversion Explain the Equity Premium Puzzle? Evidence from a Natural Field Experiment with Professional Traders," Natural Field Experiments 00534, The Field Experiments Website.
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    More about this item

    Keywords

    Myopic loss aversion; Prospect theory; Aggregation of results;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G4 - Financial Economics - - Behavioral Finance

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