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2016 | 26(4) | 11-25

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Susceptibility to Behavioural Biases among Professional lnvestors versus Naive lndividuals

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Acknowledgments These studies were financed by grant 04/BMN/19/12 from Warsaw School of Economics, Collegium of Management and Finance. I would like to thank the Association of IndMdual Investors based in Wrocław, Poland, for help in conducting the studies described herein. Abstract Purpose: Exploring the degree of susceptibility to behavioural biases (the disposition effect, overconfidence, mental accounting, and the sunk cost fallacy) among professional investors (n = 90) from Polish investment banks and brokerage houses and among naive individuals, i.e. psychology students (n = 90) from the Department of Psychology, Uni- versity of Finance and Management. Design: This study was conducted on a convenience sample. 180 participants represented two 90-person groups, which differ in the level of expertise with a stock market investing filled out ąuestionnaire madę up of four situational exercises, which assessed susceptibility to behavioural biases. Findings: Statistical analyses demonstrated that susceptibility to behavioural biases may not depend on the level of expertise in investing, i.e. a higher level of expertise with invest- ing does not prevent from irrational behavior on the stock market. Research limitations: This study is limited by the relatively smali number of participants, a specific sample of psychology students as naive individuals, who due to their psychological knowledge may be familiar with some biases in this study and the exercises used to measure susceptibility to biases, which could seem somewhat artificial to professionals. Practical implications: Expertise with investing does not necessarily help in making rational decisions. Social implications: This study indicates the necessity of better educating investors to make them aware of psychological aspects of decision making. Originality/value: This study has provided a new insight into the psychological aspects of decision making in the stock market.



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