Chapter 6 An experimental analysis of myopic loss aversion

Purpose Previous studies showed mixed results as to the cause of myopic loss aversion (MLA). This paper reexamines the main driver of MLA, considering two factors from previous studies and an additional factor. Design/methodology/approach Experimentally investigate whether flexibility of investment, frequency of information feedback, or timing of decision cause MLA. Findings Timing of decision and flexibility of investment explain most differences in subject behavior. Frequency of information feedback makes only a marginal contribution. Originality/value of the paper The differences in subject behavior can be interpreted by a shift in their reference points depending on the difference in flexibility of investment, frequency of information feedback, or timing of decision.