A systematic review of ordinary people, behavioural financial biases

Abstract

Behavioural Finance and Behavioural Economics are jointly fast-growing fields of research, which encompass both academicia and business. Therefore, the purpose of this paper is to study the biases in decision-making by ordinary investors, also considering socio-economic variables. We do so by applying systematic review tools and meta-analysis. In this study, this analysis is conducted by using tools developed for this purpose, such as EPIReviewer. We sourced information primarily from WOS-Clarivate, and also supplement it with the Proquest database. The search provided 890 studies in total, from 2009 to 2019. After cleaning the dataset, 110 publications remained for the analysis. The output of the analysis consisted of summarised tables, frequency and cross-tabulation tables corresponding to the 17 types of biases and 15 socioeconomic variables. Inasmuch as the study was targeted to discover the type of behavioural biases and constructs that exhibit the ordinary investor‘s group, it was found that the evidence in the literature was joined with that of the institutional investors. On the other hand, the socio-economic evidence about gender, age, studies, and geography in the literature review is short, limited and partial. The results emerging from this review provide a first insight into the behavioural finance biases and socio-economic links of ordinary people based on the most recent publications. This should inform more extended studies given the importance of ordinary people as a general reference for the economy.

Keywords:

• Behavioural finance
• behavioural biases
• ordinary investors
• systematic review
• web of science

JEL CLASSIFICATIONS:

• D12
• D14
• D87

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 $\frac{\left(\mathit{True}\mathit{Positive}\right(TP)}{\mathit{True}\mathit{Positive}\left(TP\right)+\mathit{False}\mathit{Positive}(FP)})$

2 $\left(\frac{\sum \mathit{True}\mathit{Positives}}{\sum \mathit{Total}\mathit{elements}}\right)$

3 $\mathit{MCC}=\frac{(\mathit{TPxTN}-\mathit{FPxFN})}{\sqrt{(TP+FP)(TP+FN)(TN+FP)(TN+FP)}}$