Behavioral Finance: The Explanation of Investors’ Personality and Perceptual Biases Effects on Financial Decisions

Abstract

One of the important factors on investors financial decisions are perceptual errors which affect their decisions while buying and selling stock. The good of this study is to recognize the popular perceptual errors among investors and its connection with their personality. Therefore, 200 of the investors in Tehran's stock market were taken randomly as samples and the needed data was gathered through questions, using the parametric analysis and correlation we have tried to check the accuracy of the hypotheses. The finding demonstrates that the offered perceptual errors have got a significant correlation with the investors' personality. The conclusions exhibit that there is direct correlation between extroversion and openness whit hindsight bias and over confidence bias, between neuroticism and randomness bias, between escalation of commitment and availability biases. Also, there is a reverse correlation between conscientiousness and randomness bias, between openness and availability bias. [PUBLICATION ABSTRACT]