Review of psychology, Vol. 23 No. 1-2, 2016.
Original scientific paper
Breaking the myth about rational investor: Investors’ susceptibility to heuristical and biased reasoning
ANdrijana Mušura Gabor
orcid.org/0000-0002-3120-8862
; Zagreb School of Economics and Management
Lidija Gamulin
; ZBInvest
Abstract
The theory of rational investors has empirically proven not to be an accurate model for describing how investors in reality behave. However, there is a great number of finance theorists and orthodox economists that advocate the theory of homo economicus. In this paper, we take closer look at susceptibility of investors to heuristics and biases in general, and look at some individual differences with respect to committing to these biases. Individual differences include educational background, professional experience, and years of investing experience. We found that susceptiveness to heuristics and biases is present in majority of hypothetical scenarios. With regard to individual differences, we found that educational background can play a role in susceptiveness to heuristics and biases.
Keywords
behavioral finance; heuristics; biases; investors’ rationality
Hrčak ID:
167567
URI
Publication date:
5.9.2016.
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