1. Mitigating Behavioral Biases: The Role of Financial Literacy in Investment Decisions
- Author
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Schrott, Lisa and Schrott, Lisa
- Abstract
This master thesis discusses the impact of overconfidence, home bias and anchoring on investment decisions and examines the role of financial literacy in mitigating the biases. Results found surprisingly high financial knowledge scores in comparison to the existing literature. A positive home bias and anchoring score were found; in contrast, an average negative overconfidence score was found, indicating that participants on average were underconfident regarding their financial knowledge. Gender differences were found for all three biases, with lower confidence levels and higher home bias and anchoring scores for women. Linear regression models were used to examine the relationship between financial literacy and the bias levels. Results found a positive relationship for overconfidence and a negative effect for home bias and anchoring. Statistical tests therefore found an increase in confidence for participants with a higher FL score. In contrast, an increase in FL led to a decrease in domestic assets in the portfolio and led to financial decision-making being less influenced by external information., Masterarbeit Universität Innsbruck 2024
- Published
- 2024