Myopic Loss Aversion: An Alternative Explanation of the Momentum Premium

2015 ◽  
Author(s):  
Gareth Hurst ◽  
Paul Docherty
Keyword(s):  
Loss Aversion ◽  
Alternative Explanation ◽  
Myopic Loss Aversion

Transgenerational Succession and R&D Investment: A Myopic Loss Aversion Perspective

2021 ◽  
pp. 104225872110384
Author(s):  
Weiwen Li ◽  
Garry D. Bruton ◽  
Xinchun Li ◽  
Shuang Wang
Keyword(s):  
Loss Aversion ◽  
Family Firms ◽  
Empirical Support ◽  
Leadership Transition ◽  
Short Term ◽  
Difference In Differences ◽  
Myopic Loss Aversion ◽  
Negative Effect ◽  
The Difference ◽  
D Investment

A transgenerational leadership transition is one of the most critical events in the life cycle of family firms. Drawing upon the myopic loss aversion (MLA) perspective, we argue that outgoing leaders and other company stakeholders tend to closely watch the later-generation successors immediately after a transgenerational succession, and thus the successors will focus on short-term developments and invest less in R&D activities. Employing the difference-in-differences approach, we find empirical support for our argument that transgenerational succession decreases R&D intensity. The negative effect of transgenerational succession is more pronounced when the later-generation successors suffer from a higher level of MLA.

scholarly journals Exchange Asymmetries Incorrectly Interpreted as Evidence of Endowment Effect Theory and Prospect Theory?

2007 ◽  
Vol 97 (4) ◽  
pp. 1449-1466 ◽  
Author(s):  
Charles R Plott ◽  
Kathryn Zeiler
Keyword(s):  
Utility Function ◽  
Prospect Theory ◽  
Loss Aversion ◽  
Alternative Explanation ◽  
Endowment Effect ◽  
Effect Theory

Systematic asymmetries in exchange behavior have been widely interpreted as support for “endowment effect theory,” an application of prospect theory positing that loss aversion and utility function kinks set by entitlements explain observed asymmetries. We experimentally test an alternative explanation, namely, that asymmetries are explained by classical preference theories finding influence through the experimental procedures typically used. Contrary to the predictions of endowment effect theory, we observe no asymmetries when we modify procedures to remove the influence of classical preference theories. When we return to traditional-type procedures, however, the asymmetries reappear. The results support explanations based in classical preference theories and reject endowment effect theory. (JEL D01)

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