Causes, Consequences, and Cures of Myopic Loss Aversion an Experimental Investigation

17 Pages Posted: 27 Apr 2009

See all articles by Gerlinde Fellner-Röhling

Gerlinde Fellner-Röhling

University of Ulm - Department of Mathematics and Economics

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Cologne - Department of Economics

Multiple version iconThere are 2 versions of this paper

Abstract

We use an experiment to examine 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 to increase investment levels.

Suggested Citation

Fellner-Röhling, Gerlinde and Sutter, Matthias, Causes, Consequences, and Cures of Myopic Loss Aversion an Experimental Investigation. The Economic Journal, Vol. 119, No. 537, pp. 900-916, April 2009. Available at SSRN: https://ssrn.com/abstract=1376016 or http://dx.doi.org/10.1111/j.1468-0297.2009.02251.x

Gerlinde Fellner-Röhling

University of Ulm - Department of Mathematics and Economics ( email )

Helmholzstrasse
Ulm, D-89081
Germany

Matthias Sutter (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

University of Cologne - Department of Economics

Cologne, 50923
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
3
Abstract Views
469
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information