The Research On Influential Factors Of Myopic Loss Aversion

Myopic loss aversion is an important concept in behavioral economics. Since it was put forward, researchers have been focusing on the evaluation period and investment horizon. The paper develops other direction and discusses the influential factors of myopic loss aversion, including situational factors and psychological factors.Study 1 includes two experiments to investigate the effect of task’s probability level and decision-makers’roles on myopic loss aversion by using 2x3 mixed design. Experiment 1 finds that task’s probability level influenced myopic loss aversion. There was myopic loss aversion in the medium loss probability task, but this phenomenon did not exist in the high loss probability and low loss probability task. The results suggest that myopic loss aversion is not a kind of common phenomenon. Experiment 2 examines the effect of decision-makers’roles on myopic loss aversion, finding that when offered advice to friends, individuals did not show the phenomenon of myopic loss aversion and were more rational.Study 2 adopts 2x3 completely randomized experimental design to discuss the effect of motivation to avoid failure and self-efficacy on myopic loss aversion in the medium loss probability task. The results show that:motivation to avoid failure affected myopic loss aversion. Individuals with the medium degree of motivation to avoid failure showed myopic loss aversion, but individuals with the high or low degree of motivation to avoid failure did not show up. In addition, we also find that both individuals with high self-efficacy and low self-efficacy showed myopic loss aversion. It suggests that self-efficacy does not impact myopic loss aversion.Study 3 mainly investigates the effect of situational and psychological factors on myopic loss aversion in the situation which the task’s probability is unknown using 2x2 x 3 completely randomized experimental design. Results find:in the situation which the task’s probability was unknown, individuals could exhibit myopic loss aversion in the high loss probability task and reverse myopic loss aversion in the low loss probability task. It suggests that compared to the situation that task’s probability is known, the function of "short-sight" is more common in the situation that the probability is unknown. In the early decision, myopic loss aversion was affected by motivation to avoid failure. Individuals with the medium degree of motivation to avoid failure showed myopic loss aversion, but individuals with the high or low degree of motivation to avoid failure did not show up. Furthermore, risk estimation did not completely decrease with the increase of motivation to avoid failure. In the later decision, the outcome of investment influenced individuals’risk estimation, but did not affect myopic loss aversion. Individuals who experience more gain or more loss showed the same degree of myopic loss aversion.These results can not only provide some direction and reference for the future research of myopic loss aversion, but also guide our investment decisions in real life.