Determinants of Individual Investors’ Behaviors: Evidence from Tunisian Stock Market

Abstract

Recent studies on individual investors' have shown that they do not act in a rational manner. However, several behavioral factors influence their investment decisions in Stock Markets. The present study considers the theory of individual investors' irrationality and investigates into their behavior with regard to investment decisions. In this sphere, we attempt to find out whether some psychological as well as demographic factors affect Tunisian individual investors' behavior and then try to examine the factors that are more influencing than others. To achieve our aims, we used a survey approach and developed a questionnaire that included sixty three items dealing with six biases. Then, we conducted a descriptive and factorial analysis on the biases of the collected data. Therefore, results have indicated that the Tunisian investors' behaviors are subject to five behavioral biases: representativeness, herding attitude, loss aversion, mental accounting, and anchoring. Apart from these biases, when attempting to categorize Tunisian investors on the basis of demographic variables, we have also found that gender, age and experience have an interaction with behavioral financial factors in investment decisions.