The Impact of Feedback Frequency on Risk Taking: How general is the Phenomenon?

Thomas Langer () and Martin Weber
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Thomas Langer: Westfälischen Wilhelms-Universität Münster Lehrstuhl für BWL, insbesondere Finanzierung, Postal: Universitätsstraße 14-16 48143 Münster

No 00-49, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: In a recent QJE-article, Gneezy and Potters (1997) present experimental evidence for the impact of feedback frequency on individual risk taking behavior in repeated investment decisions. They find an increased willingness to invest into a risky asset if less frequent feedback about the outcome of previous investments is provided. The observed decision pattern is explained by myopic loss aversion, a combination of mental accounting and loss aversion. In this note, we argue that the findings of Gneezy and Potters on the relationship between feedback frequency and risk taking are not as general as they might seem. We provide theoretical arguments and experimental evidence to demonstrate that the reported phenomenon is not robust to changes in the risk profiles of the given investment options.

Pages: 15 pages
Date: 2000-10-31
New Economics Papers: this item is included in nep-exp
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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Working Paper: The impact of feedback frequency on risk taking: how general ist the phenomenon? (2000)
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