Myopic Investment Management*

Eriksen, Kristoffer W.; Kvaløy, Ola

doi:10.1093/rof/rfp019

Cited by 84 publications

(78 citation statements)

References 33 publications

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“…Following these studies we wish to explore whether differences in investment behavior and in investors' preferences as described above are driven by demographic factors such as gender, age, education and investment volume. Moreover, some researchers such as Eriksen and Kvaløy (2010), Chakravarty et al (2011), Andersson et al (2013) and Pollmann et al (2014) find that the risk-taking behavior of individuals differs between investment decisions made with their own money and with other people's money. Thus, we are interested in whether the participants make their decisions only on behalf of themselves or also on behalf of others.…”

Section: Socio-demographic Profilementioning

confidence: 99%

Which proportion of SR investments is enough? A survey-based approach

Dorfleitner

Nguyen

2016

Bus Res

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This article examines the determinants of the optimal percentage that private investors seek to invest in a socially responsible (SR) way when forming their portfolio. By conducting a global online survey in English, German and French, we find indications that it is sufficient for the majority of investors to have a certain amount of their budget invested sustainably. Accordingly, the optimal proportion tends to be lower the higher the available investment volume is. In addition, the non-financial utility derived from SR investments appears to be independent of the form of financing the investor provides. Moreover, the results show that well-educated women and slightly younger persons seek to invest a higher percentage of their portfolio socially responsibly.

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Section: Socio-demographic Profilementioning

confidence: 99%

Which proportion of SR investments is enough? A survey-based approach

Dorfleitner

Nguyen

2016

Bus Res

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“…Real market data has recently added to theoretical research, showing several aspects of MLA. Haigh and List argued that the MLA extent is larger for Chicago Board of Trade traders than for students and Eriksen and Kvaløy [17] found the same pattern for financial advisors of a Norwegian bank. Kliger and Levit showed that a manipulation of investors' evaluation period of financial assets affect their prices while Mayhew and Vitalis suggested that although market experience mitigates the MLA effect, participants do not transfer these results to other settings.…”

Section: The Myopic Aspect Of Skewness Investmentmentioning

confidence: 87%

“…Control of the information-processing system is carried out through a manipulation of the flow of information into and out of short-term store. These control processes include decisions of all sorts, rehearsal, coding, and search of short-and long-term store [17][18][19][20].Long-term store contains learned sequences of information processing that may be initiated by a control process or by environmental or internal information input but that are then executed automatically with few demands upon the capacity of short-term store [21][22][23][24][25][26][27][28][29][30]. This automatic process can be activated in response to a particular input configuration, where the inputs may be externally or internally generated and include the general situational context, or it will be activated automatically without the necessity of active control or attention by the subject [31][32][33][34][35][36].…”

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confidence: 99%

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How Behavioral Finance Patterns affect Investors’ Activity in Capital Markets?

Rothman¹

2017

J Bus Fin Aff

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interrelated through learning. Most of these nodes are normally passive and inactive and are termed long-term store when in the inactive state. The set of currently activated nodes is termed short-term store. Longterm store in thus a permanent, passive repository for information [1]. Short-term store is a temporary state; information in short-term store is said to be lost or forgotten when it reverts from an active to an inactive phase. Control of the information-processing system is carried out through a manipulation of the flow of information into and out of short-term store. These control processes include decisions of all sorts, rehearsal, coding, and search of short-and long-term store [17][18][19][20].Long-term store contains learned sequences of information processing that may be initiated by a control process or by environmental or internal information input but that are then executed automatically with few demands upon the capacity of short-term store [21][22][23][24][25][26][27][28][29][30]. This automatic process can be activated in response to a particular input configuration, where the inputs may be externally or internally generated and include the general situational context, or it will be activated automatically without the necessity of active control or attention by the subject [31][32][33][34][35][36]. For example, a red traffic light might initiate a braking response when the perceiver is in a car, and a walking, halting, or traffic-scanning response when the perceiver is a pedestrian. Since an automatic process operates through a relatively permanent set of associative connections in long-term store, any new automatic process requires an appreciable amount of consistent training to develop fully. Furthermore, once learned, an automatic process is difficult to suppress, to modify, or to ignore.Keywords: Behavioral finance; Inefficient market; Attention; Corporate news; Event study; Financial markets; Pharmaceutical companies; Probability weighting functions Introduction Psychology framework -Attention theoryThe concept of attention has its roots in the nineteenth century where the study of the attention effects was a favorite topic for introspection. Only by the end of the 1950s, the situation had altered radically, and the newly legitimized concept of attention was a central topic in an emergent cognitive psychology [1][2][3][4][5]. The concept, in general, defines an individual's notable ability to resist distraction as a manifestation of selective attention. Likewise, our research describes investors` attention-grabbing focus to market events as can be seen as selective attention.The main function of the term "attention" in post-behavioristic psychology is to provide a label for some of the internal mechanisms that determine the significance of stimuli and thereby make it impossible to predict behavior by stimulus considerations alone [6][7][8][9][10]. The main idea of attention within cognitive psychology is that the organism appears to control the choice of stimuli that will be allowed, i...

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“…Most studies considering this setting do not 4 Several studies also compare decisions that are payoff-relevant to the decision maker to decisions that are only payoff-relevant for someone else (and not to the decision maker). For example, Füllbrunn and Luhan (2015) and Eriksen and Kvaloy (2010) observe a cautions shift based on the task by Gneezy and Potters (1997). Using the same task Pollmann et al (2014) observe more risky decisions for others instead.…”

Section: Related Literature and Hypothesesmentioning

confidence: 99%

Higher-Order Risk Preferences in Social Settings

Heinrich

Mayrhofer

2014

SSRN Journal

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License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.Additional information: Use policyThe full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. Abstract We study prudence and temperance (next to risk aversion) in social settings. Previous experimental studies have shown that these higher-order risk preferences affect the choices of individuals deciding privately on lotteries that only affect their own payoff. Yet, many risky and financially relevant decisions are made in the social settings of households or organizations. We elicit higher-order risk preferences of individuals and systematically vary how an individual's decision is made (alone or while communicating with a partner) and who is affected by the decision (only the individual or the partner as well). In doing so, we can isolate the effects of other-regarding concerns and communication on choices. Our results reveal that the majority of choices are risk averse, prudent, and temperate across social settings. We also observe that individuals are influenced significantly by the preferences of a partner when they are able to communicate and choices are payoffrelevant for both of them.

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Myopic Investment Management*

Cited by 84 publications

References 33 publications

Which proportion of SR investments is enough? A survey-based approach

Which proportion of SR investments is enough? A survey-based approach

How Behavioral Finance Patterns affect Investors’ Activity in Capital Markets?

Higher-Order Risk Preferences in Social Settings

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