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Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: Myopic Loss Aversion and Stock Investments: An Empirical Study of Private Investors
Author(s): Lee, Boram
Veld-Merkoulova, Yulia
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Keywords: Portfolio Allocation
Myopic Loss Aversion
Individual Investors
Issue Date: Sep-2016
Date Deposited: 14-Jun-2016
Citation: Lee B & Veld-Merkoulova Y (2016) Myopic Loss Aversion and Stock Investments: An Empirical Study of Private Investors. Journal of Banking and Finance, 70, p. 235–246.
Abstract: Myopic loss aversion was suggested byBenartzi and Thaler (1995)as an explanation for the equity premium puzzle. Its main prediction is that loss averse investors, who evaluate their investment performance too frequently and therefore often observe small losses on their stock portfolios, would invest too little in equity. We investigate the link between myopic loss aversion and actual investment decisions of individual investors, using survey data. Our results are consistent with the predictions of Benartzi and Thaler. Higher myopic loss aversion is associated with lower stock investment as a share of total assets. Investors tend to evaluate their stock portfolio performance too often, which contributes to the prevalence of myopic loss aversion. The effect of myopia is most apparent when investors both evaluate their portfolios frequently and trade stocks regularly.
DOI Link: 10.1016/j.jbankfin.2016.04.008
Rights: This item has been embargoed for a period. During the embargo please use the Request a Copy feature at the foot of the Repository record to request a copy directly from the author. You can only request a copy if you wish to use this work for your own research or private study. Lee, B., Veld-Merkoulova, Y., Myopic Loss Aversion and Stock Investments: An Empirical Study of Private Investors, Journal of Banking & Finance (2016), doi: This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.

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