Tutorial 8 Practical Ways to Mitigate or Overcome Behavioral Biases II

Question 1

What is myopic loss aversion?

Answer 1

=occurs when investors strongly focus on the short term of their investment, leading them to react too negatively to recent losses.

That may be at the expense of long-term benefits.

Question 2

What are the main findings of Borsboom et al. (2022)

Answer 2

1. people rely heavily on price charts displaying past performance
2. Shorter time frames are associated with more trading activitiy, resulting in higher transaction fees and investor welfare losses
3. Time frame does not affect average risk-taking.