Re-focusing investors' attention away from losses can reduce negative emotional response

Destracting investors helped lessen emotional responses to investment losses, researchers report at the conclusion of a recent study. "In terms of making investment choices, a higher level of distraction didn't matter," one author said. "However, while participants' choices weren't affected, their physiological, or emotional responses to investment losses decreased when they were more distracted. This shows how physiological loss aversion, or the tendency to react to financial losses more than comparable gains, may be reduced by not focusing on the losses."

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