IDEAS home Printed from https://ideas.repec.org/a/rfa/journl/v11y2023i5p1-13.html
   My bibliography  Save this article

Heuristics and Stock Buying Decision: Evidence from Brazil, Pakistan, and Malaysia Stock Markets

Author

Listed:
  • Sandra da Silva Santos
  • Rodolfo Leandro de Faria Olivo
  • George André Willrich Sales
  • Fabiana Lopes da Silva

Abstract

Applying both qualitative and quantitative approaches, we investigate the influence of anchoring and adjustment, representativeness, and availability heuristics on stock buying decisions of individual investors at the Brazilian stock market and their relations with demographic aspects. We also compared the results with investors from Pakistan and Malaysia. To collect the data, a survey was administered. Data were analyzed by description, correlation, and regression analysis. The results show that all three heuristics are likely to affect the Brazilian investor’s stock buying decisions. The effect of heuristics is similar across genders, type of subscriber, and level of education groups. However, for the older group and those with income higher than BRL15,000.00 per month (about USD 3,000.00), the anchoring heuristic exhibit a more extreme effect. From these findings, this paper reveals the presence of the heuristics in stock market decisions in developing countries, such as Brazil, as well as Pakistan and Malaysia. However, the effect on Asian’ individual investors is more prevalent.

Suggested Citation

  • Sandra da Silva Santos & Rodolfo Leandro de Faria Olivo & George André Willrich Sales & Fabiana Lopes da Silva, 2023. "Heuristics and Stock Buying Decision: Evidence from Brazil, Pakistan, and Malaysia Stock Markets," International Journal of Social Science Studies, Redfame publishing, vol. 11(5), pages 1-13, September.
    • Handle: RePEc:rfa:journl:v:11:y:2023:i:5:p:1-13
    as

    Download full text from publisher

    File URL: https://redfame.com/journal/index.php/ijsss/article/download/6157/6282
    Download Restriction: no
    File URL: https://redfame.com/journal/index.php/ijsss/article/view/6157
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. William N. Goetzmann & Alok Kumar, 2008. "Equity Portfolio Diversification," Review of Finance, European Finance Association, vol. 12(3), pages 433-463.
    2. Terrance Odean, 1999. "Do Investors Trade Too Much?," American Economic Review, American Economic Association, vol. 89(5), pages 1279-1298, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jacobs, Heiko & Müller, Sebastian & Weber, Martin, 2014. "How should individual investors diversify? An empirical evaluation of alternative asset allocation policies," Journal of Financial Markets, Elsevier, vol. 19(C), pages 62-85.
    2. Camille Magron & Maxime Merli, 2012. "Stocks repurchase and sophistication of individual investors," Working Papers of LaRGE Research Center 2012-02, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    3. Juhani T. Linnainmaa, 2011. "Why Do (Some) Households Trade So Much?," The Review of Financial Studies, Society for Financial Studies, vol. 24(5), pages 1630-1666.
    4. Jakusch, Sven Thorsten & Meyer, Steffen & Hackethal, Andreas, 2019. "Taming models of prospect theory in the wild? Estimation of Vlcek and Hens (2011)," SAFE Working Paper Series 146, Leibniz Institute for Financial Research SAFE, revised 2019.
    5. J. Nellie Liang & Scott Weisbenner, 2002. "Investor behavior and the purchase of company stock in 401(k) plans - the importance of plan design," Finance and Economics Discussion Series 2002-36, Board of Governors of the Federal Reserve System (U.S.).
    6. Merkle, Christoph & Weber, Martin, 2014. "Do investors put their money where their mouth is? Stock market expectations and investing behavior," Journal of Banking & Finance, Elsevier, vol. 46(C), pages 372-386.
    7. Merkle, Christoph, 2017. "Financial overconfidence over time: Foresight, hindsight, and insight of investors," Journal of Banking & Finance, Elsevier, vol. 84(C), pages 68-87.
    8. Magron, Camille & Merli, Maxime, 2015. "Repurchase behavior of individual investors, sophistication and regret," Journal of Banking & Finance, Elsevier, vol. 61(C), pages 15-26.
    9. Hackethal, Andreas & Haliassos, Michael & Jappelli, Tullio, 2012. "Financial advisors: A case of babysitters?," Journal of Banking & Finance, Elsevier, vol. 36(2), pages 509-524.
    10. Bailey, Warren & Kumar, Alok & Ng, David, 2010. "Behavioral Biases of Mutual Fund Investors," Working Papers 10-23, University of Pennsylvania, Wharton School, Weiss Center.
    11. Guiso, Luigi & Sodini, Paolo, 2013. "Household Finance: An Emerging Field," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 1397-1532, Elsevier.
    12. Annaert, Jan & De Ceuster, Marc & Verstegen, Kurt, 2013. "Are extreme returns priced in the stock market? European evidence," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3401-3411.
    13. ANNAERT, Jan & DE CEUSTER, Marc & VERSTEGEN, Kurt, 2012. "Are extreme returns priced in the stock market? European evidence," Working Papers 2012018, University of Antwerp, Faculty of Business and Economics.
    14. repec:eur:ejesjr:371 is not listed on IDEAS
    15. Ahrens, Steffen & Bosch-Rosa, Ciril & Roulund, Rasmus, 2019. "Price Dynamics and Trader Overconfidence," Rationality and Competition Discussion Paper Series 161, CRC TRR 190 Rationality and Competition.
    16. Jennie Bai & Turan G. Bali & Quan Wen, 2019. "Is There a Risk-Return Tradeoff in the Corporate Bond Market? Time-Series and Cross-Sectional Evidence," NBER Working Papers 25995, National Bureau of Economic Research, Inc.
    17. Barber, Brad M. & Odean, Terrance & Zhu, Ning, 2009. "Systematic noise," Journal of Financial Markets, Elsevier, vol. 12(4), pages 547-569, November.
    18. Daniel Hoechle & Stefan Ruenzi & Nic Schaub & Markus Schmid, 2017. "The Impact of Financial Advice on Trade Performance and Behavioral Biases," Review of Finance, European Finance Association, vol. 21(2), pages 871-910.
    19. Kukacka, Jiri & Barunik, Jozef, 2013. "Behavioural breaks in the heterogeneous agent model: The impact of herding, overconfidence, and market sentiment," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(23), pages 5920-5938.
    20. Anginer,Deniz & Han,Snow Xue & Yildizhan,Celim, 2017. "Do individual investors ignore transaction costs ?," Policy Research Working Paper Series 8098, The World Bank.
    21. Abreu, Margarida & Mendes, Victor & Santos, João A.C., 2011. "Home country bias: Does domestic experience help investors enter foreign markets?," Journal of Banking & Finance, Elsevier, vol. 35(9), pages 2330-2340, September.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rfa:journl:v:11:y:2023:i:5:p:1-13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Redfame publishing (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.