When investment is repeated, previous outcomes (winning/losing) as well as the current budget level (gain/loss domain) influence decisions. The first is related to the so-called "gamblers fallacy". The second to value function relative to some reference point. Both effects have been extensively studied, however not their interaction. We present a meta-study of five experiments initially conducted to investigate myopic-lossaversion. We observe that investment is related to the number of previous winning rounds as well as to the current budget position relative to a reference point. These effects persist when the analysis is extended to settings with restricted flexibility concerning investment.
reference point; gamblers fallacy; meta study;
- C91: Laboratory, Individual Behavior
- D81: Criteria for Decision-Making under Risk and Uncertainty
- G11: Portfolio Choice • Investment Decisions
Astrid Hopfensitz, « Previous Outcomes and Reference Dependence: A Meta Study of Repeated Investment Tasks with Restricted Feedback », TSE Working Paper, n° 09-087, 30 septembre 2009.
TSE Working Paper, n° 09-087, 30 septembre 2009