Rene Schwaiger, PhD

Rene Schwaiger, PhD

I am a Post Doctoral Researcher at the Department of Banking and Finance and the Scientific Coordinator of Lab Operations at the Innsbruck EconLab at the University of Innsbruck. My research focuses on experimental economics, especially environmental economics, experimental finance, and meta-science.

The Consequences of Narrow Framing for Risk-Taking: A Stress Test of Myopic Loss Aversion

Published in Forthcoming: Management Science, 2024

Abstract: Narrow bracketing in combination with loss aversion has been shown to reduce individual risk-taking. This is known as myopic loss aversion (MLA) and has been corroborated by many studies. Recent evidence has contested this notion indicating that MLA’s applicability is confined to highly artificial settings. Given the impact of these findings, we reevaluated the evidence on MLA with substantially higher statistical power than in almost all previous studies. We systematically modified the seminal study design by Gneezy and Potters (1997) to include five key adjustments. These involved down-scaled returns, return compounding, and extended investment horizons. Our results—which are highly robust to analytical heterogeneity—consistently document the presence of MLA across all experimental conditions.

Recommended citation: Schwaiger, R., Strucks, M., Zeisberger, S. (2024). The Consequences of Narrow Framing for Risk-Taking: A Stress Test of Myopic Loss Aversion, Forthcoming: Management Science.
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