Do investors struggle with long-term horizons, leading them to invest too conservatively? Could this be why many have trouble saving for retirement?
Recent research by Markus Strucks (MBS School of Business), Stefan Zeisberger, and Rene Schwaiger (Universität Innsbruck) delves deep into this question. Their findings confirm that Myopic Loss Aversion (MLA)—the tendency to focus on short-term losses over long-term gains—does indeed deter people from investing. This behavior leads to overly cautious decisions, such as selling during market dips, which undermines long-term investment success.
The researchers were able to demonstrate that MLA persists in more realistic settings than those which were tested in the literature, a topic that had sparked a debate among scholars in recent years. Their study, conducted over the past four years, has now been accepted for publication in Management Science.