Measuring behavioral biases in individual investors decision-making and sociodemographic correlations: a systematic review

Nicolas de Oliveira Cardoso, Eduarda Zorgi Salvador, Gustavo Broch, Frederike Monika Budiner Mette, Claudia Emiko Yoshinaga and Wagner de Lara Machado

Qualitative Research in Financial Markets, 2023, vol. 16, issue 4, 636-659

Abstract: Purpose - This paper aims to identify the impacts of sociodemographic covariates on behavioural biases (BB) scores; the psychometric evidence of the BB measurement instruments; and the main BB that influences the decision-making of individual investors. Design/methodology/approach - Papers were retrieved through search using keywords in ten databases. This systematic review is based on 69 peer-reviewed papers, most of which were published between 2017 and 2021. The relevance of the included papers was assessed through the analysis of statistical/psychometric methods used, and content analysis of the BB literature and its sociodemographic correlations. Findings - Overconfidence is higher in men and not related to age. There was no consensus regarding the relationship between BB and other sociodemographic variables. Most measuring instruments aread hoc, showing ≤ 4 types of psychometric evidence and assessing ≤ 9 BB. Therefore, the findings demonstrate that there is no gold standard instrument for measuring investors’ BB. Furthermore, 37 BB were cited as influencers of individual investors’ decision-making and overconfidence, herding, anchoring, representativeness and loss aversion were the most prevalent. Research limitations/implications - Considering that very few systematic reviews have been published in the behavioural finance area, this paper highlights the current state-of-the-art and identifies significant gaps in the literature that can be explored by further research. Originality/value - To the best of the authors’ knowledge, this is the first systematic review that analyses the psychometric properties of instruments used for individual investors BB assessment.

Keywords: Behavioural finance; Cognitive biases; Emotional biases; Heuristics; Psychometrics; Behavioural biases; Investment decisions (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:qrfmpp:qrfm-05-2022-0090

DOI: 10.1108/QRFM-05-2022-0090

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