The Effects of Temporal Distance on Choice of Investment Options

초록

The current research investigates investors' perceived temporal distances from investment timing as antecedents of myopic loss aversion and examines how the portions of investment in bonds and stocks differ according to the temporal distances. The experiment was conducted with between-subjects factorial design. The study manipulated two different situations: subjects were asked to buy funds either in one week or in two years; and compared the results of the investment portions they decided. The results of the experiment indicate that subjects tended to invest more in stock funds when the investment timing was distant. It can be construed that consumers become more oriented to high-level goal of high yields when they form a representation of distant future about the investment timing, in turn, less loss-aversive, while they become more sensitive to details when the investment time is in the near future, which, in turn, often results in myopic loss aversion. The following implications and limitations were mentioned in the discussion.

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