Taking more risk tomorrow: time horizons and investment decisions

Marc Oliver Rieger, Trang Minh Nguyen, Benjamin Schnur and Mei Wang

Applied Economics Letters, 2021, vol. 28, issue 6, 459-463

Abstract: We conduct an online experiment with 96 participants to examine the effect of separation of time horizons on investment decisions. We find that when asked to invest in short and long-time horizons separately rather than simultaneously, participants tend to invest more in risky assets, especially for the long-time horizon. They also tend to revise their decisions less after obtaining feedback on their projected, suggesting that they are more satisfied with their initial decision. The findings offer financial advisors practical suggestions to help clients to improve their investment decisions.

Date: 2021
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DOI: 10.1080/13504851.2020.1761522

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