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

Nicolas de Oliveira Cardoso (Department of Psychology, Pontifical Catholic University of Rio Grande do Sul, Porto Alegre, Brazil)
Eduarda Zorgi Salvador (Department of Psychology, Pontifical Catholic University of Rio Grande do Sul, Porto Alegre, Brazil)
Gustavo Broch (Department of Psychology, Pontifical Catholic University of Rio Grande do Sul, Porto Alegre, Brazil)
Frederike Monika Budiner Mette (Department of Business Administration, Pontifical Catholic University of Rio Grande do Sul, Porto Alegre, Brazil)
Claudia Emiko Yoshinaga (Finance and Accounting Department, Fundação Getulio Vargas – FGV EAESP, São Paulo, Brazil)
Wagner de Lara Machado (Department of Psychology, Pontifical Catholic University of Rio Grande do Sul, Porto Alegre, Brazil)

Qualitative Research in Financial Markets

ISSN: 1755-4179

Article publication date: 17 November 2023

Issue publication date: 14 June 2024

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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 are ad 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

Acknowledgements

Funding: This study was financed in part (through the provision of PhD scholarship) by the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior–Brasil (CAPES)–Finance Code 001.

Conflict of interest: The authors have no relevant financial or non-financial interests to disclose.

Authors’ contribution: All authors contributed to the study’s conception and design. Material preparation, data collection and analysis were performed by [Nicolas de Oliveira Cardoso], [Eduarda Zorgi Salvador], [Gustavo Brock] and [Wagner de Lara Machado]. The first draft of the manuscript was written by [Nicolas de Olivera Cardoso], [Frederike Monika Budiner Mette] and [Claudia Emiko Yoshinaga]. All authors commented on previous versions of the manuscript. All authors read and approved the final manuscript.

Availability of data and material: The data sets used and/or analysed during the current study are available from the corresponding author upon reasonable request.

Corrigendum: It has come to the attention of the publisher that the article, de Oliveira Cardoso, N., Zorgi Salvador, E., Broch, G., Mette, F.M.B., Yoshinaga, C.E. and de Lara Machado, W. (2023), “Measuring behavioral biases in individual investors decision-making and sociodemographic correlations: a systematic review”, Qualitative Research in Financial Markets, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/QRFM-05-2022-0090, incorrectly listed Claudia Emiko Yoshinaga’s affiliation. The correct affiliation is Finance and Accounting Department, Fundação Getulio Vargas – FGV EAESP, São Paulo, Brazil. This oversight has now been corrected in the online article.

Citation

de Oliveira Cardoso, N., Zorgi Salvador, E., Broch, G., Mette, F.M.B., Yoshinaga, C.E. and de Lara Machado, W. (2024), "Measuring behavioral biases in individual investors decision-making and sociodemographic correlations: a systematic review", Qualitative Research in Financial Markets, Vol. 16 No. 4, pp. 636-659. https://doi.org/10.1108/QRFM-05-2022-0090

Publisher

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Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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