SFB 504 discussion paper 00-49

Thomas Langer
Westfälischen Wilhelms-Universität Münster Lehrstuhl für BWL, insbesondere Finanzierung
Universitätsstraße 14-16 48143 Münster

Martin Weber
Lehrstuhl für ABWL, Finanzwirtschaft, insb. Bankbetriebslehre
L 5, 2, D-68131 Mannheim

The Impact of Feedback Frequency on Risk Taking: How general is the Phenomenon?

In a recent QJE-article, Gneezy and Potters (1997) present experimental evidence for the impact of feedback frequency on individual risk taking behavior in repeated investment decisions. They find an increased willingness to invest into a risky asset if less frequent feedback about the outcome of previous investments is provided. The observed decision pattern is explained by myopic loss aversion, a combination of mental accounting and loss aversion. In this note, we argue that the findings of Gneezy and Potters on the relationship between feedback frequency and risk taking are not as general as they might seem. We provide theoretical arguments and experimental evidence to demonstrate that the reported phenomenon is not robust to changes in the risk profiles of the given investment options.
B4 Weber
Creation date:
Publication Status
Downloadable version
Download titlepage for internal use only

Direct questions and comments to our webmaster.