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Does the Investor’s Trading Experience Reduce Susceptibility to Heuristic-Driven Biases? The Moderating Role of Personality Traits

Author

Listed:
  • Neenu Chalissery

    (Research Department of Commerce and Management Studies, Farook College (Autonomous), Kozhikode 673 632, Kerala, India)

  • Mosab I. Tabash

    (College of Business, Al Ain University, Al Ain P.O. Box 64141, United Arab Emirates)

  • T. Mohamed Nishad

    (Research Department of Commerce and Management Studies, Farook College (Autonomous), Kozhikode 673 632, Kerala, India)

  • Ibtehal M. Aburezeq

    (College of Education, Humanities and Social Sciences, Al Ain University, Al Ain P.O. Box 64141, United Arab Emirates)

  • Linda Nalini Daniel

    (Business Department, Higher Colleges of Technology, Abu Dhabi P.O. Box 41012, United Arab Emirates)

Abstract

The aim of this study was to evaluate whether trading experience reduces exposure to heuristic-driven biases, namely availability bias, anchoring and adjustments bias, representativeness bias, and confirmation biases of individual investors operating in the Indian stock market, through the moderating role of the Big Five personality traits. To achieve these research objectives, primary data were collected through a structured questionnaire. The sample consisted of 408 individual investors trading on the Indian stock market, who were selected on a convenient basis. Confirmatory factor analysis and Cronbach’s alpha were used to measure the validity and reliability of the data. Further analysis was conducted using Pearson’s correlation and multiple regression. The results of this study prove that increased trading experience does not always reduce the susceptibility to heuristic biases. Increased trading experience reduces the susceptibility to availability, and anchoring and adjustment heuristics of individual investors operating on the Indian stock market. The present study has some relevant implications for investors, portfolio managers, financial advisors, and other interested persons in the stock market.

Suggested Citation

  • Neenu Chalissery & Mosab I. Tabash & T. Mohamed Nishad & Ibtehal M. Aburezeq & Linda Nalini Daniel, 2023. "Does the Investor’s Trading Experience Reduce Susceptibility to Heuristic-Driven Biases? The Moderating Role of Personality Traits," JRFM, MDPI, vol. 16(7), pages 1-21, July.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:7:p:325-:d:1189078
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    References listed on IDEAS

    as
    1. Mustapha Chaffai & Imed Medhioub, 2020. "Islamic Finance and Anchoring Heuristic Bias: An Analysis to Gulf Islamic Stock Markets," Working Papers 1422, Economic Research Forum, revised 20 Nov 2020.
    2. Nicolosi, Gina & Peng, Liang & Zhu, Ning, 2009. "Do individual investors learn from their trading experience?," Journal of Financial Markets, Elsevier, vol. 12(2), pages 317-336, May.
    3. Chang, Charles & Jiang, Jing & Kim, Kenneth A., 2009. "A test of the representativeness bias effect on stock prices: A study of Super Bowl commercial likeability," Economics Letters, Elsevier, vol. 103(1), pages 49-51, April.
    4. Rzeszutek Marcin, 2015. "Personality Traits and Susceptibility to Behavioral Biases among a Sample of Polish Stock Market Investors," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 47(1), pages 71-81, September.
    5. Gina Nicolosi & Liang Peng & Ning Zhu, 2003. "Do Individual Investors Learn from Their Trading Experience?," Yale School of Management Working Papers ysm439, Yale School of Management, revised 01 Sep 2009.
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