Myopic loss aversion when deciding for others and convex bonuses
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2020-08-28
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en
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Abstract
Myopic loss aversion (MLA) is provided as explanation of the equity premium puzzle. This research adds a realistic component to the analysis of MLA as such, namely MLA when investing for another without and with convex bonus system for the decision maker. The link between convex bonus systems and MLA is new. This is investigated with use of an online experiment. The findings are as follows. Decision makers display MLA-like investment acting without and with convex bonuses. A convex bonus system appears to have no effect on MLA. However, the findings are not robust to several checks. This is in line with existing literature. Existing literature also displays inconsistency of results.
Keywords:
Equity premium puzzle
Myopic loss aversion
Decision making for others
Experiment
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Faculteit der Managementwetenschappen