Does Commitment or Feedback Influence Myopic Loss Aversion? An Experimental Analysis

Posted: 23 Aug 2008

See all articles by Thomas Langer

Thomas Langer

University of Muenster - Finance Center

Martin Weber

University of Mannheim - Department of Banking and Finance

Date Written: August, 22 2008

Abstract

Empirical research has demonstrated that a lower feedback frequency combined with a longer period of commitment decreases myopia and thereby increases the willingness to invest in a risky asset. In an experimental study, we disentangle the intertwined manipulation of feedback frequency and commitment to analyze how each individual variable contributes to the change in myopia and how they interact. We find that the period of commitment exerts a substantial impact and the feedback frequency a far less pronounced impact. There is a strong interaction between both variables. The results have significant implications for real world intertemporal decision making.

Keywords: Intertemporal decision making; Myopic loss aversion; Feedback frequency; Length of commitment; Evaluation period

JEL Classification: D80, G10

Suggested Citation

Langer, Thomas and Weber, Martin, Does Commitment or Feedback Influence Myopic Loss Aversion? An Experimental Analysis (August, 22 2008). Journal of Economic Behavior and Organization, Vol. 67, pp. 810-819, 2008, Available at SSRN: https://ssrn.com/abstract=1246823

Thomas Langer

University of Muenster - Finance Center ( email )

Universitatsstr. 14-16
Muenster, 48143
Germany
+49 251 83 22033 (Phone)

Martin Weber (Contact Author)

University of Mannheim - Department of Banking and Finance ( email )

D-68131 Mannheim
Germany
+49 621 181 1532 (Phone)
+49 621 181 1534 (Fax)

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