News From the Field
Cut and Run: MSU Research Predicts Risk Avoidance in the Face of Chronic Economic Loss
October 27, 2008
Investors are liquidating their retirement investments in droves, rather than risk further loss of their nest eggs. Research conducted by Michigan State University (MSU) scientists explains this effect, which contradicts widely accepted "prospect theory." Prospect theory predicts that people will tend to gamble to recoup their losses, but the MSU research indicates a great deal more aversion to risk following a string of financial losses.
Michigan State University
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