Article ID: | iaor201111725 |
Volume: | 72 |
Issue: | 1 |
Start Page Number: | 35 |
End Page Number: | 50 |
Publication Date: | Jan 2012 |
Journal: | Theory and Decision |
Authors: | Weber Martin, Langer Thomas, Zeisberger Stefan |
Keywords: | decision, risk |
For loss averse investors, a sequence of risky investments looks less attractive if it is evaluated myopically–an effect called myopic loss aversion (MLA). The consequences of this effect have been confirmed in several experiments and its robustness is largely undisputed. The effect’s causes, however, have not been thoroughly examined with regard to one important aspect. Due to the construction of the lotteries that were used in the experiments, none of the studies is able to distinguish between MLA and an explanation based on (myopic) loss