OVERCONFIDENCE, REPRESENTATIVENESS AND HERDING BIAS AMONG GERMAN INVESTORS: HOW DEMOGRAPHIC AND OTHER VARIABLES INFLUENCE THEIR DECISION

The study assesses based on the responses from the survey of 342 persons how behavioural biases affect German investors' investment decisions. Three behavioural biases were examined: overconfidence, representativeness, and herding behavior. It was determined that demographic factors affecting German investors, such as gender, age, experience, education, and frequency of investment, influence this choice. Male German investors are more susceptible to all three biases than females. Young investors (<35 years) are more at risk for the overconfidence bias and the representativeness bias, while older investors (>35 years) are more at risk for the herding bias. Investors with a lower experience (<5 years) on the stock market have a higher tendency for the three biases than German investors with a higher experience (> five years). Investors with a high (i.e. university) education are more susceptible to the three biases than those with a low education. Investors with a high investing frequency (> three months) scored higher for all three biases than investors with a low investing frequency (<3 months).