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Myopic Loss Aversion and Investment Decisions: from the Laboratory to the Field

Kazi Iqbal (), Asad Islam (), John List () and Vy Nguyen

No 28730, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Whether, and to what extent, behavioral anomalies uncovered in the lab manifest themselves in the field remains of first order importance in finance and economics. We begin by examining behavior of retail traders/investors making investment decisions in constructed laboratory markets. Our results show that the behaviors of the traders are consistent with myopic loss aversion. We combine the lab results with a unique individual-level matched dataset on daily stock market transactions and portfolio positions over a two year period. We find that lab behaviors help to predict, but do not fully capture, the essential real-world trading analogs of retail traders.

JEL-codes: C9 C93 D03 N97 (search for similar items in EconPapers)
Date: 2021-04
New Economics Papers: this item is included in nep-cwa, nep-exp, nep-hme and nep-upt
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