标题: Loss Aversion and Regret Minimization [打印本页] 作者: Wendy01 时间: 2011-7-13 15:30 标题: Loss Aversion and Regret Minimization
What is the main difference between the two?
I can see Loss Aversion is to avoid selling securities at a loss, or holding to losing positions for too long.
How about Regret Minimization (or, Fear of Regret)?作者: Darien 时间: 2011-7-13 15:30
from the practice examples:
loss aversion: your trade is underwater but you won't realize the loss (i.e. hold onto the trade, maybe cost averaging or simply starring)
fear of regreat: you made a bad trade in x and now you won't trade x anymore作者: dyga 时间: 2011-7-13 15:30
Loss aversion - hold onto losers (or add to losers)
fear of regret - hold onto winners too long - would hate to sell and then watch it keep ripping. Also hold onto losers too long - by selling you finally admit you made a bad choice. However at some point you will sell if you can blame it on something other than yourelf....particularly macro data like GDP or i rates.
Blame game is a way to reduce cognitive dissonance. Ties into defenses for bad forecasting. if-only, cet-parib, etc. All this stuff is so interconnected.
