An Investigation of the Affect Heuristic in the Brazilian Stock Market

An Investigation of the Affect Heuristic in the Brazilian Stock Market

Ricardo Alonso Gonzalez (UFBA/NPGA Business School, Federal University of Bahia, Bahia, Brazil) and Adriano Leal Bruni (UFBA/NPGA Business School, Federal University of Bahia, Bahia, Brazil)
Copyright: © 2015 |Pages: 22
DOI: 10.4018/ijabe.2015010102
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Abstract

It is considered that decisions are influenced, even in part, by aspects of affect. It is agreed with that studies that suggest the action of the affect heuristic, which can influence the perception of risks and benefits, even in environments where rationality should be more prominent, such as in the financial market. This paper investigates how risks and benefits are perceived by Brazilian stock market investors. Additionally, it investigates whether these aspects could be explained by gender, age or perceived knowledge about the market. The analysis makes use of the t-test, logistic regression and factor analysis and is applied to a sample consisting of 143 investors. The results confirm the existence of the affect heuristic and a negative association between perceived knowledge of the market and the affect heuristic.
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2. Theoretical Background–Material

In this section, the theoretical foundation of the affect heuristic and key studies that support its theoretical framework will be presented. One of the studies that stands out is an empirical study by Finucane, Alhakami, Slovic & Johnson (2000), whose methods and results are given in Table 1. In addition to this important study, other studies conducted internationally are shown in Table 2.

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