Does Commitment or Feedback Influence Myopic Loss Aversion? An Experimental Analysis
Posted: 23 Aug 2008
Date Written: August, 22 2008
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: Suggested Citation