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

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 aread 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.