Mikael Gustavsson; Richard Karlsson; Henrik Wannberg , pp. 37. Inst. för ekonomi och management/Dept. of Business Administration and Management, 2001.
Problem: The question is if investors falls into psychological decision traps when they are about to make an investments decision. Research in other areas suggests that this may be case. The reason is that they are not aware of that psychological decision traps exist. If so, it can lead to pernicious consequences for the return on the portfolios they manage.
Purpose: To investigate if investors fall into four different psychological decisions traps: anchoring, confirming evidence, overconfidence and regression towards mean, at investments in IPOs
Method: We have collected data through a form of experiment. The experiment was designed with test related to a fictitious Initial Public Offering.
Conclusions: The result from the empirical study shows that stock investors falls into the psychological decisions traps. In general there are more amateur investors who falls into the traps than professional analysts.
We have created a model over the investment decision process and the traps associated to each step in the process.
Mikael Gustavsson 0702-46 28 94
Richard Karlsson 0707- 46 28 83
Henrik Wannberg 0736- 26 35 54