Myopic loss aversion: Information feedback vs. investment flexibility

Charles Bellemare, Michaela Krausee, Sabine Krfgerf,Chendi Zhang (2005) “Myopic loss aversion: Information feedback vs. investment flexibility“. Economics Letters, vol., 87, pp.319 – 324. *****

==notes by yinung==

主要結論:

只要資訊頻率降低, 即可讓投資風險資產意願提高.

主要實驗設計:

在於資訊迴饋頻率 frequent/infrequent, 其 treatment 有三種:

H: 投資期間1期, 資訊迴饋頻率每1期
M: 投資期間3期, 資訊迴饋頻率每1期
L: 投資期間3期, 資訊迴饋頻率每3期

Bellemare et al. (2005) 實驗結果是: 投資額度 L~M>H

Results

  • We confirm the works by Gneezy and Potters (1997) and others building on it, and furthermore find that experimentally induced myopia in combination with loss aversion remained to affect investment behavior systematically even when flexibility in adjusting investment was no longer varied. MLA is driven by information feedback.

image

Abstract

We experimentally disentangle the effect of information feedback from the effect of investment flexibility on the investment behavior of a myopically loss averse investor. Our findings show that varying the information condition alone suffices to induce behavior that is in line with the hypothesis of Myopic Loss Aversion.

廣告

Cooperation under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games

Bó, Pedro Dal (2005) “Cooperation under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games." American Economic Review, Volume 95, Number 5, December 2005 , pp. 1591-1604(14). ; brown.edu 提供的 [PDF]  ; DOI: http://dx.doi.org/10.1257/000282805775014434 ;另見本站另一篇同作者在 2005AER 的文章

 

==notes by yinung==

本篇以有限重覆賽局 PD game 為對照,比較無限重覆賽局之影響。

主要針對 equilibrium actions and equilibrium outcome ,而非 equilibrium strategies (可能要參考 Dale O.  Stahl II (1991))

I focus on equilibrium actions and outcomes instead of equilibrium strategies,
I find that the percentage of outcomes in which both subjects cooperate is almost 19 percent when it is an equilibrium, whileit is less than 3 percent when it is not.

本文採用之賽局結構

PD1                           PD2
=============================     =============================
          合作        背叛                  合作     背叛
 合作     (65, 65)   (10, 100)     合作     (75, 75)   (10, 100)
 背叛     (100,10)   (35, 35)      背叛     (100,10)   (45, 45)
=============================     =============================

有限賽局的設計(Finitely Repeated Games):

共有 1, 2,4 回合三種

子賽局均衡之推導,參見 Dale O.  Stahl II (1991)

the set of subgame perfect equilibria can be calculated using the results in Dale O.  Stahl II (1991).

主要發現:

高隨機繼續玩機率,會有較高的合作率
…find strong evidence that the higher the probability of continuation, the higher the levels of cooperation.

引文:

針對 one-shot PD game; 合作率 9%; 無限重覆 (繼續機率=3/4) 合作率 38%。

…in the one-shot prisoner’s dilemma games studied here, the cooperation rate is 9 percent, for a probability of continuation of 3/4, it is 38 percent.

在有限重覆賽局中,也有終局效果 end-game effect,在最後一回合,合作率較低。

I find that the level of cooperation in the final round of the finitely repeated games is similar to the level of cooperation in one-shot games.

Abstract:

While there is an extensive literature on the theory of infinitely repeated games, empirical evidence on how “the shadow of the future" affects behavior is scarce and inconclusive. I simulate infinitely repeated prisoner’s dilemma games in the lab with a random continuation rule. The experimental design represents an improvement over the existing literature by including sessions with finite repeated games as controls and a large number of players per session (which allows for learning without contagion effects). I find that the shadow of the future matters not only by significantly reducing opportunistic behavior, but also because its impact closely follows theoretical predictions.

References

  • 子賽局均衡之推導和 rate of cooperation outcome 的定義 (??)
    Stahl, Dale O., II. “The Graph of Prisoner’s Dilemma Supergame Payoffs as a Function of the Discount Factor." Games and Economic Behavior, 1991, 3 (3), pp. 368 – 84.

Do Professional Traders Exhibit Myopic Loss Aversion? An Experimental Analysis

MICHAEL S. HAIGH and JOHN A. LIST (2005) “Do Professional Traders Exhibit Myopic Loss Aversion? An Experimental Analysis." Journal of Finance, Volume 60, Issue 1, pages 523–534, February 2005. DOI: 10.1111/j.1540-6261.2005.00737.x; iastate.edu 提供的 [PDF];

ABSTRACT

Two behavioral concepts, loss aversion and mental accounting, have been combined to provide a theoretical explanation of the equity premium puzzle. Recent experimental evidence supports the theory, as students’ behavior has been found to be consistent with myopic loss aversion (MLA). Yet, much like certain anomalies in the realm of riskless decision-making, these behavioral tendencies may be attenuated among professionals. Using traders recruited from the CBOT, we do indeed find behavioral differences between professionals and students, but rather than discovering that the anomaly is muted, we find that traders exhibit behavior consistent with MLA to a greater extent than students.

Probabilistic Patents

Lemley, Mark A., and Carl Shapiro. 2005. “Probabilistic Patents." Journal of Economic Perspectives, 19(2): 75-98. DOI: 10.1257/0895330054048650; URL: http://www.aeaweb.org/articles.php?doi=10.1257/0895330054048650

 

==Notes by yinung==

多年前就知道 Carl Shapiro 轉往研究 IP 相關之經濟議題, 不過卻到今日才略領其大意…

 

===引文===

為何稱做 “Probabilistic" patents

Virtually all property rights contain some element of uncertainty…. There are two fundamental dimensions of  uncertainty:
1) uncertainty about the commercial significance of the invention being patented, and
2) uncertainty about the validity and scope of the legal right being granted.

(p.81)…Many patent applications, and indeed patents themselves, are like lottery tickets. Inventors who are uncertain of the commercial significance…Two of the most common practices used by patentees to increase their chances of winning the patent lottery are continuations and a proliferation of closely related patents… increasing the chance that
their patents will cover technology that becomes widely adopted by market participants.

Patent 訴訟不見得不好, 因為有外部性

… because litigating patent disputes to completion tends to generate positive externalities, by clarifying the limits of patent protection if the patent is upheld or encouraging wider use of the innovation if the patent is invalidated.

為何大部份的 patent 的價值都很低, 但申請數量卻眾多?
1. 申請者不確定哪些會有價值 (Scherer, 2001; Denton and Heald, 2004)
2. 申請者不知道其價值 (Rivette and Kline, 2000)
3. 數量多有利於財務操作和增加市場評價 (Lemley, 2000; Hall, Jaffe and Trajtenberg, 2005)
4. 當做 signaling mechanisms (Long, 2002)
5. 防禦性功能 “defensive” use of patents to deter others from suing (Hall and Ziedonis, 2001; Lemley, 2001)
6. 綁在 patent portfolio 中 (Parchomovsky and Wagner, 2004)

Why do inventors file for many patents that turn out to have little or no value? Surely part of the reason is that patent applicants do not know which patents will be valuable and which will be worthless (Scherer, 2001; Denton and Heald, 2004). But other explanations have been offered: a failure to understand the value of patents (Rivette and Kline, 2000); the use of patents to obtain financing and boost market valuation (Lemley, 2000; Hall, Jaffe and Trajtenberg, 2005); the use of patents as signaling mechanisms (Long, 2002); and the “defensive” use of patents to deter others from suing (Hall and Ziedonis, 2001; Lemley, 2001). Even individually weak patents might have value as part of a large patent portfolio, because the portfolio can be licensed as a block or can serve to deter lawsuits (Parchomovsky and Wagner, 2004).

專利入場券 patent ticket

… “patent thicket," in which hundreds of patents can apply to a single product (Shapiro, 2001; FTC, 2003). …One way to cut through the patent thicket is for incumbents with extensive patent portfolios to enter into broad cross-licenses (that is, exchanges of roughly symmetric patent positions) to “clear” the thicket.

royalty stacking

Without such cross-licenses, the result is inefficient “royalty stacking,” in which a manufacturer without its own patent portfolio must pay royalties to a number of separate companies.

申請者比較會有個別資訊 …applicants appear to have considerable private information at an early stage about the likely value of at least some of their patents. … Allison, Lemley, Moore and Trunkey (2004) find… most significant predictors of ultimate value observable to researchers are the industry, the number of prior art references, the number of claims in the patent and the time invested in prosecution of the patent.

使專利失效 invalidating a patent 會有正外部性 (即會 under-supplied), 因此被控之廠商通常會尋求和解, 而不是興訟

… challenges to patents are undersupplied (Gilbert, 2004; Farrell and Merges, 2004)

The key insight is that invalidating a patent generates significant positive externalities, and activities that generate positive externalities are undersupplied. There are very strong reasons to believe that challenges to patents are undersupplied (Gilbert, 2004; Farrell and Merges, 2004).

==original Abstract==

Economists often assume that a patent gives its owner a well-defined legal right to exclude others from practicing the invention described in the patent. In practice, however, the rights afforded to patent holders are highly uncertain. Under patent law, a patent is no guarantee of exclusion but more precisely a legal right to try to exclude. Since only 0.1% of all patents are litigated to trial, and since nearly half of fully litigated patents are declared invalid, this distinction is critical to understanding the economic impact of patents. The growing recognition among economists and legal scholars that patents are probabilistic property rights has significant implications for our understanding of patents in four important areas: (1) reform of the system by which patents are granted; (2) the legal treatment of patents in litigation; (3) the incentives of patent holders and alleged infringers to settle their disputes through licensing or cross-licensing agreements rather than litigate them to completion; and (4) the antitrust limits on agreements between rivals that settle actual or threatened patent litigation.