On Myopic Loss Aversion
25 Pages Posted: 7 Oct 2016 Last revised: 26 Mar 2019
Date Written: March 20, 2019
It has been widely documented in laboratory experiments that subjects act more risk-averse when they make their decisions frequently (e.g., one as opposed to several decisions at a time), a phenomenon dubbed "myopic loss aversion" by Benartzi and Thaler (1995). The present paper uses two new experiments to show that this standard pattern of behavior can be reversed. The results cannot be explained by mental accounting or loss aversion but are consistent with the hypothesis that behavior is less random when the stakes are higher.
Keywords: myopic, loss, aversion, reference, point, random, utility, stochastic, choice
JEL Classification: D81, C91, D01, D03
Suggested Citation: Suggested Citation