THE HIDDEN FORCES OF INVESTMENT DECISION-MAKING: A PRISMA-BACKED SYSTEMATIC REVIEW OF BEHAVIORAL BIASES
Keywords:
behavioral finance, behavioral biases, irrational decisions, investment choices, overconfidence bias, herding bias, systematic review, quantitative methods, secondary data-based studiesAbstract
Behavioral finance considers the irrational decisions of investors that differ from traditional and
modern finance theories. This systematic review article examines the influence of behavioral biases on
investment decisions and identifies specific biases and their effect on the investment choices of individual
investors. The study included 29 peer-reviewed studies published in English between 2012 and May 2022 that
objectively assessed behavioral biases and investment decisions in various contexts. Over 21 types of biases
were identified, with overconfidence and herding bias being the most studied. The study population lacked
diversity, highlighting a need for future research to include a more diverse group of investors and investigate
the impact of behavioral biases in different contexts. Methodologically, the majority of previous studies were
descriptive research that used quantitative methods and structured questionnaires to collect data. Correlation
and regression analysis were used to analyze results, along with Structure Equation Modeling and various
models for secondary data-based studies.
