Myopic loss aversion (MLA) has been proposed as an explanation for the equity premium puzzle, and experiments indicate that investors exhibit behavior consistent with MLA. But a caveat is that a large bulk of financial assets is managed by investment managers whose objectives may differ substantially from those of private investors. Most importantly they manage their clients' money, not their own. In this paper we test experimentally how individuals take risk with other people's (â€œclientsâ€ ) money. We find that subjects behave consistently with MLA over their clients' money and take less risk with their clients' money than with their own.
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