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Asymmetric Learning from Financial Information

47 Pages Posted: 13 Jun 2012 Last revised: 23 Apr 2014

Camelia M. Kuhnen

University of North Carolina Kenan-Flagler Business School

Date Written: December 1, 2013

Abstract

This study asks whether investors learn differently from gains versus losses. I find experimental evidence which indicates that being in the negative domain leads individuals to form overly pessimistic beliefs about available investment options. This pessimism bias is driven by people reacting more to low outcomes in the negative domain relative to the positive domain. Such asymmetric learning may help explain documented empirical patterns regarding the differential role of poor vs. good economic conditions on investment behavior and household economic choices.

Keywords: financial decision making, learning, gains, losses, genes, COMT, neuroeconomics

JEL Classification: G11, D83, C91

Suggested Citation

Kuhnen, Camelia M., Asymmetric Learning from Financial Information (December 1, 2013). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2083173 or http://dx.doi.org/10.2139/ssrn.2083173

Camelia M. Kuhnen (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States
(919) 9623284 (Phone)

HOME PAGE: http://public.kenan-flagler.unc.edu/faculty/kuhnenc/

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