Myopic Loss Aversion: Information Feedback vs. Investment Flexibility

11 Pages Posted: 25 Jul 2004

See all articles by Charles Bellemare

Charles Bellemare

Université Laval - Département d'Économique; Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPÉE); IZA Institute of Labor Economics

Michael U. Krause

University of Cologne

Sabine Kröger

Université Laval - Département d'Économique

Chendi Zhang

University of Warwick - Finance Group

Date Written: March 10, 2004

Abstract

We experimentally disentangle the effect of information feedback from the effect of investment flexibility on the investment behavior of a myopically loss averse investor. Our findings show that varying the information condition alone suffices to induce behavior that is in line with the hypothesis of Myopic Loss Aversion.

Keywords: Myopic loss aversion, information feedback, commitment, investment flexibility

JEL Classification: D81, C91

Suggested Citation

Bellemare, Charles and Krause, Michael U. and Kroger, Sabine and Zhang, Chendi, Myopic Loss Aversion: Information Feedback vs. Investment Flexibility (March 10, 2004). EFA 2004 Maastricht Meetings Paper No. 3062; CentER Discussion Paper No. 2004-32. Available at SSRN: https://ssrn.com/abstract=557822 or http://dx.doi.org/10.2139/ssrn.557822

Charles Bellemare (Contact Author)

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada

Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPÉE)

Pavillon De Sève
Ste-Foy, Quebec G1K 7P4
Canada

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Michael U. Krause

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Sabine Kroger

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada

Chendi Zhang

University of Warwick - Finance Group ( email )

Gibbet Hill Rd
Coventry, CV4 7AL
Great Britain

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