Influence of the level of education and gender on financial decision-making: Insights from prospect theory

Abstract

Behavioral finance challenges assumptions of rationality in financial decision-making, since it assumes that the way in which information is presented determines decisions. The objective of this research is to study the influence of aspects such as the level of education and gender on financial decision-making. To do this, the seminal experiment of Kahneman and Tversky (1979) is replicated with 600 students from a Colombian university. The data collected is analyzed using: 1) the independence test 2; 2) the Kruskal-Wallis non-parametric test; and 3) the non-parametric Mann-Whitney test. The results evidence the application of prospect theory in financial decision-making, showing an independence of decisions based on the grouping variables used. It was also found that women have a greater risk aversion and that the level of education does not influence financial decisions.