Does Binding of Feedback Influence Myopic Loss Aversion? An Experimental Analysis

Martin Weber and Thomas Langer

No 4084, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The feedback frequency and the length of commitment are two important features of investment alternatives in intertemporal decision-making. So far, empirical research has shown that a lower feedback frequency combined with a longer binding period decreases myopia and thereby increases the willingness to invest into a risky asset. Almost nothing is known, however, about the isolated effect of each variable and about a possible interaction of these variables. In an experimental study, we disentangle the intertwined manipulation of feedback frequency and binding period, commonly used in previous research, to analyse how both variables alone contribute to the change in myopia. We find a strong effect depending on the length of commitment, a much less pronounced effect of feedback and a strong interaction between both variables. The results have important implications for real world intertemporal decision-making.

Keywords: Intertemporal decision-making; Myopic loss aversion; Feedback frequency; Length of commitment; Evaluation period (search for similar items in EconPapers)
JEL-codes: D80 G10 (search for similar items in EconPapers)
Date: 2003-10
New Economics Papers: this item is included in nep-exp and nep-rmg
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Citations: View citations in EconPapers (16)

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Related works:
Working Paper: Does binding or feedback influence myopic loss aversion: an experimental analysis (2003)
Working Paper: Does Binding or Feeback Influence Myopic Loss Aversion - An Experimental Analysis (2003)
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