Do financial advisors exhibit myopic loss aversion?

Kristoffer Eriksen () and Ola Kvaløy

Financial Markets and Portfolio Management, 2010, vol. 24, issue 2, 159-170

Abstract: Myopic loss aversion (MLA) has been proposed as an explanation for the equity premium puzzle, and a number of experiments on students indicate that people do exhibit MLA. However, many people do not rely on their own judgment when making investment decisions, but obtain help from financial investment advisors on how to allocate their wealth. The preferences and choices of financial advisors are thus important for understanding investment behavior. In this paper we make use of 50 professional financial advisors to examine whether they exhibit behavior consistent with MLA. Indeed, we find that they behave consistently with MLA to a larger extent than students. Copyright Swiss Society for Financial Market Research 2010

Keywords: Myopic loss aversion; Experiment; C91; D81; G11 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (23)

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DOI: 10.1007/s11408-009-0124-z

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