Question

Over the past six months, you have watched as your parent's retirement savings have declined in value by 25 percent due to a severe financial market downturn. As a result, you have decided that you will never invest in stocks for your own retirement but will instead keep all of your money in an insured bank account. Which behavioral characteristic have you acquired as a result of the market downturn

Answer 1

Answer:

Myopic loss aversion

Explanation:

Loss Aversion is defined as the likelihood for individuals to strongly prefer making or avoiding losses over getting or acquiring gains.

Myopic loss aversion is simply defined as likelihood to look(focus) on avoiding short-term losses, even at the hands or expense of long-term gains. It is simply written as;

MLA = Loss aversion + mental accounting.

It is a kind of loss aversion that comprises mainly the idea that people do not see far enough into the future to invest in the right sense and as such life cycle hypothesis is forgotten or ignored.