Elucidating rational investment decisions and behavioral biases: Evidence from theTaiwanese stock market

  title={Elucidating rational investment decisions and behavioral biases: Evidence from theTaiwanese stock market},
  author={Huei-Wen Lin},
  journal={African Journal of Business Management},
  • Huei-Wen Lin
  • Published 2011
  • Business
  • African Journal of Business Management
Financial innovation has witnessed an increasing number of financial products in the financial industry. Various investment activities involving individual investors have also become prevalent in the Taiwanese financial market. Financial managers thus highly prioritize elucidating the investment behaviors of individual investors and then incorporate them in investment decision making. This study examines how rational decision making and behavioral biases are related, as well compares the… Expand

Figures and Tables from this paper

Assessing the Linkage of Behavioural Traits and Investment Decisions Using SEM Approach
The goal of this research is to investigate to what extent long term and short term stock investors share different behavioural characteristics. A structural model is employed to compare the traitsExpand
Behavioral Biases as Predictors of Investment Decision of Individual Investors in Pakistan
Behavior Finance is a new field that combines attitudes, cognition, emotions, and feelings of cognitive psychology. This phenomenon explains why investors make rational financial decisions in theExpand
Evidence on rationality and behavioural biases in investment decision making
Purpose - The purpose of this paper is to investigate the relationship between rational decision-making and behavioural biases among individual investors in India, as well as to examine the influenceExpand
The study aims at identifying the behavioral factors that explain the process of investment decision-making by individual investors in an emerging economy. This study is based on the behavioralExpand
Irrational Behaviour and Stock Investment Decision. Does Gender Matter? Evidence from Sri Lanka
The research aims to examine the effect of the irrational behaviour of individual investors on stock investment decisions, specifically, anchoring, disposition effect, home bias, herding,Expand
Comforting Investments are Rarely Profitable: Impediments in Investor Decision Making
This research aims at testing and confirming existence of selected behavioral biases of investors that affect their decisions. Five behavioral biases affecting irrational behavior of investors wereExpand
Elucidating investors rationality and behavioural biases in Indian stock market
Purpose The purpose of this paper is to empirically test the relationship between investors’ rationality and behavioural biases like self-attribution, overconfidence. Design/methodology/approachExpand
The Existence of Behavioral Biases and Personality Traits in Explaining the Effect of Fundamental and Technical Analysis to Investment Performance in Indonesia Stock Exchange
Rational investors focus on the fundamental and technical analysis in their investment decisions. In fundamental analysis, they consider economic conditions, industry analysis, and company analysisExpand
Impact of RISK on BEHAVIOURAL Biases across the Stock Market Investors: Evidence from Pakistan
The study aimed at exploring the major behavioural factors that affect the investment decision of individual investors of Lahore Stock exchange. The objective was also to gain the insight of bothExpand
Exploring market overreaction, investors’ sentiments and investment decisions in an emerging stock market
Abstract The representative heuristic and overconfidence are cognitive biases that influence the decisions of the investors in the stock market. Overconfident investors tend to rely on representativeExpand


Up Close and Personal: Investor Sophistication and the Disposition Effect
Empirical evidence is found that wealthier individuals and individuals employed in professional occupations exhibit a lower disposition effect, and trading frequency also tends to reduce the disposition effect. Expand
Presentation Slides for 'Investor Psychology and Security Market Under and Overreactions'
We propose a theory of securities market under- and overreactions based on two well-known psychological biases: investor overconfidence about the precision of private information; and biasedExpand
Patterns of Behavior of Professionally Managed and Independent Investors
In this paper, we analyze the investment patterns of a large number of clients of a major Israeli brokerage house during 1994. We compare the behavior of clients making independent investmentExpand
Are Taiwanese individual investors reluctant to realize their losses
Abstract Taiwanese investors exhibit a stronger disposition effect than US investors. On average, the proportion for realizing gains is 2.5 times that for realizing losses. The corresponding multipleExpand
Gender and Investment Behavior: on Taiwanese Individual Investors
Following the rising of Behavioral Finance, various psychological biases have earned great attention. With the evidence that male investors are more overconfident than female, the impacts of genderExpand
The investment behavior and performance of various investor types: a study of Finland's unique data set
Using data from Finland, this study analyzes the extent to which past returns determine the propensity to buy and sell. It also analyzes whether these di!erences in past-return-based behavior andExpand
We present evidence from questionnaire responses of mutual fund investors about recollections of past fund performance. We find that investor memories exhibit a positive bias, consistent with currentExpand
Are Investors Reluctant to Realize Their Losses?
I test the disposition effect, the tendency of investors to hold losing investments too long and sell winning investments too soon, by analyzing trading records for 10,000 accounts at a largeExpand
Investigation of Investors' Overconfidence, Familiarity and Socialization
This study, using a sample of New Zealand investors, investigates three behavioural finance theories: investor overconfidence, socialization and the familiarity effect. We find support for theExpand
Does herding behavior exist in Chinese stock markets
This paper examines the presence of herd formation in Chinese markets using both individual firm- and sector-level data.We analyze the behavior of return dispersions during periods of unusually largeExpand