Evaluation Periods and Asset Prices in a Market Experiment


  • Uri Gneezy,

  • Arie Kapteyn,

  • Jan Potters

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    • Gneezy is at the University of Chicago Graduate School of Business and Technion, Kapteyn is at RAND, and Potters is at Tilburg University. We acknowledge helpful comments by the editor, an anonymous referee, participants of the TMR workshop on Savings and Pensions, seminars at Tilburg University and Humboldt University Berlin, the ESA conference in Tucson, and by Martin Dufwenberg in particular. Potters thanks the Royal Netherlands Academy of Arts and Sciences for financial support and Harvard Business School for its hospitality during the completion of the paper.


We test whether the frequency of feedback information about the performance of an investment portfolio and the flexibility with which the investor can change the portfolio influence her risk attitude in markets. In line with the prediction of myopic loss aversion (Benartzi and Thaler (1995)), we find that more information and more flexibility result in less risk taking. Market prices of risky assets are significantly higher if feedback frequency and decision flexibility are reduced. This result supports the findings from individual decision making, and shows that market interactions do not eliminate such behavior or its consequences for prices.