Portfolio diversification: the influence of herding, status-quo bias, and the gambler’s fallacy

Filiz, Ibrahim; Nahmer, Thomas; Spiwoks, Markus; Bizer, Kilian

doi:10.1007/s11408-018-0311-x

Cited by 19 publications

(19 citation statements)

References 85 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Herding behavior exists in and influences property investment decisions made by fund managers (Madaan & Singh, 2019). A study by Filiz, Nahmer, Spiwoks and Bizer (2018) found non-optimal portfolio choices to be significantly influenced by herding behavior.…”

Section: Herding Effectmentioning

confidence: 99%

Role of Behavioral Biases in Real Estate Prices in Pakistan

Malik

Zafar

Ullah

et al. 2021

Real Estate Management and Valuation

View full text Add to dashboard Cite

The study aims to explore the effect of behavioral biases on financial decision making in the real estate sector of Pakistan. The data of a sample of 244 real estate investors are collected through a survey carried out using different sources. The findings of the study show the relationship of different biases, including overconfidence, herding effect, gambler’s fallacy, and regret aversion on prices of real estate. Real estate prices are more affected by overconfidence and gambler’s fallacy than herding effect and regrets aversion bias in Pakistan. The findings furthermore reveal that these biases do not depend on gender, education, and demographics. It is recommended to carefully consider the market factors while making decisions in real estate, as the prices do not always show the real value of the property.

show abstract

Section: Herding Effectmentioning

confidence: 99%

Role of Behavioral Biases in Real Estate Prices in Pakistan

Malik

Zafar

Ullah

et al. 2021

Real Estate Management and Valuation

View full text Add to dashboard Cite

show abstract

“…Experimental research examined the impact of herding behavior on diversification behavior. Results suggested that herding behavior significantly influence nonoptimal portfolio choices (Filiz, Nahmer, Spiwoks, & Bizer, 2018). In one of the research influences of herding behavior was examined on institutional investor attributing this behavior to consider same published information and thereby safeguarding investors reputation and career.…”

Section: Review Of Literaturementioning

confidence: 99%

An Analysis of Behavioral Biases in Investment Decision-Making

Madaan¹,

Singh²

2019

IJFR

View full text Add to dashboard Cite

Individual investor’s behavior is extensively influenced by various biases that highlighted in the growing discipline of behavior finance. Therefore, this study is also one of another effort to assess the impact of behavioral biases in investment decision-making in National Stock Exchange. A questionnaire is designed and through survey responses collected from 243 investors. The present research has applied inferential statistics and descriptive statistics. In the existing study, four behavioral biases have been reviewed namely, overconfidence, anchoring, disposition effect and herding behavior. The results show that overconfidence and herding bias have significant positive impact on investment decision. Overall results conclude that individual investors have limited knowledge and more prone towards making psychological errors. The findings of the study also indicate the existence of these four behavioral biases on individual investment decisions. This study will be helpful to financial intermediaries to advice their clients. Further, study can be elaborated to study other behavioral biases on investment decisions.

show abstract

“…This often leads to random processes being dealt with inappropriately. In this way, the so-called gambler's error can impede optimal decisions on diversification (see, for example Filiz et al, 2018;Stöckl et al, 2015;Huber et al, 2010). The influence of emotions on decision-making is now well-established in the literature (for an overview see, for example George and Dane, 2016;Lerner et al, 2015;Vohs et al, 2007;Baker and Wurgler, 2007;Baumeister et al, 2007;Pham, 2007;Shiv et al, 2005;Nofsinger, 2005;Lucey and Dowling, 2005;Daniel et al, 2002;Hirshleifer, 2001;Loewenstein et al, 2001;Isen, 2000;Loewenstein, 2000;Schwarz, 2000;Elster, 1998;Bless et al, 1996;Elster, 1996;Johnson and Tversky, 1983).…”

Section: Introductionmentioning

confidence: 99%

Emotions and Exposure to Risk: the Influence of Positive and Negative Emotions on Portfolio Decisions

Filiz¹

2021

Journal of Finance and Investment Analysis

Self Cite

View full text Add to dashboard Cite

This experimental study addresses the question of whether positive and negative emotions have an influence on diversification behaviour, and it reveals that only a small part of subjects take rational decisions and always choose the optimal portfolio. In addition, the study shows that the mood of subjects has an influence on their portfolio decisions and thus also on their exposure to risk. The average risk of the portfolio - measured against the standard deviation of the returns - is lower in the treatment entitled ‘neutral’ than in the treatments entitled ‘positive’ and ‘negative’. JEL classification numbers: C91, D81, G11, G41. Keywords: Emotions, Risk exposure, Laboratory experiment, Portfolio choice, Investment decisions, Investor rationality.

show abstract

Portfolio diversification: the influence of herding, status-quo bias, and the gambler’s fallacy

Cited by 19 publications

References 85 publications

Role of Behavioral Biases in Real Estate Prices in Pakistan

Role of Behavioral Biases in Real Estate Prices in Pakistan

An Analysis of Behavioral Biases in Investment Decision-Making

Emotions and Exposure to Risk: the Influence of Positive and Negative Emotions on Portfolio Decisions

Contact Info

Product

Resources

About