Effect of the anchoring and adjustment heuristic and optimism bias in stock market forecasts.
Stock market forecasting is an important and challenging process that influences investment decisions. This paper presents an experimental design that aims to measure the influence of the anchoring and adjustment heuristic and optimism bias in these forecasts. The study was conducted using informati...
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| Format: | Article |
| Language: | English |
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Universidad Católica de Colombia
2019-07-01
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| Series: | Revista Finanzas y Política Económica |
| Subjects: | |
| Online Access: | https://revfinypolecon.ucatolica.edu.co/article/view/2920 |
| _version_ | 1797429058086109184 |
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| author | Victor Alberto Peña Alina Gómez Mejía |
| author_facet | Victor Alberto Peña Alina Gómez Mejía |
| author_sort | Victor Alberto Peña |
| collection | DOAJ |
| description | Stock market forecasting is an important and challenging process that influences investment decisions. This paper presents an experimental design that aims to measure the influence of the anchoring and adjustment heuristic and optimism bias in these forecasts. The study was conducted using information from the S&P MILA Pacific Alliance Select financial index; this was presented to 670 students from the cities of Concepción (Chile), Cali (Colombia), and Lima (Peru). Data was collected and presented through an instrument that asked participants to make a forecast judgment of the said financial index, based on the presented graphics, representing a year, a month, a week, and the last closing value of the index. Thus, it was possible to measure the influence of the anchor and adjustment heuristic in order to establish whether the presence of an initial value affected the financial forecast. Similarly, the study sought to determine whether the judgment issued was biased toward an optimistic or pessimistic position, thereby proving the presence of an error or expectation bias, known as optimism bias. The results were analyzed using the least squares method, and the data panel confirmed that the anchoring and adjustment heuristic influences the forecast of the financial index used in the study. Similarly, the presence of optimism bias in the cognitive process of forecasting in finance was inferred. |
| first_indexed | 2024-03-09T09:07:42Z |
| format | Article |
| id | doaj.art-1615484195304281a41e5d4d178b9075 |
| institution | Directory Open Access Journal |
| issn | 2248-6046 2011-7663 |
| language | English |
| last_indexed | 2024-03-09T09:07:42Z |
| publishDate | 2019-07-01 |
| publisher | Universidad Católica de Colombia |
| record_format | Article |
| series | Revista Finanzas y Política Económica |
| spelling | doaj.art-1615484195304281a41e5d4d178b90752023-12-02T09:36:57ZengUniversidad Católica de ColombiaRevista Finanzas y Política Económica2248-60462011-76632019-07-0111210.14718/revfinanzpolitecon.2019.11.2.10Effect of the anchoring and adjustment heuristic and optimism bias in stock market forecasts.Victor Alberto Peña0Alina Gómez Mejía1Pontificia Universidad Javeriana CaliPontificia Universidad JaverianaStock market forecasting is an important and challenging process that influences investment decisions. This paper presents an experimental design that aims to measure the influence of the anchoring and adjustment heuristic and optimism bias in these forecasts. The study was conducted using information from the S&P MILA Pacific Alliance Select financial index; this was presented to 670 students from the cities of Concepción (Chile), Cali (Colombia), and Lima (Peru). Data was collected and presented through an instrument that asked participants to make a forecast judgment of the said financial index, based on the presented graphics, representing a year, a month, a week, and the last closing value of the index. Thus, it was possible to measure the influence of the anchor and adjustment heuristic in order to establish whether the presence of an initial value affected the financial forecast. Similarly, the study sought to determine whether the judgment issued was biased toward an optimistic or pessimistic position, thereby proving the presence of an error or expectation bias, known as optimism bias. The results were analyzed using the least squares method, and the data panel confirmed that the anchoring and adjustment heuristic influences the forecast of the financial index used in the study. Similarly, the presence of optimism bias in the cognitive process of forecasting in finance was inferred.https://revfinypolecon.ucatolica.edu.co/article/view/2920financial forecastoptimism biasanchor and adjustment heuristicjudgmentbehavioral finance |
| spellingShingle | Victor Alberto Peña Alina Gómez Mejía Effect of the anchoring and adjustment heuristic and optimism bias in stock market forecasts. Revista Finanzas y Política Económica financial forecast optimism bias anchor and adjustment heuristic judgment behavioral finance |
| title | Effect of the anchoring and adjustment heuristic and optimism bias in stock market forecasts. |
| title_full | Effect of the anchoring and adjustment heuristic and optimism bias in stock market forecasts. |
| title_fullStr | Effect of the anchoring and adjustment heuristic and optimism bias in stock market forecasts. |
| title_full_unstemmed | Effect of the anchoring and adjustment heuristic and optimism bias in stock market forecasts. |
| title_short | Effect of the anchoring and adjustment heuristic and optimism bias in stock market forecasts. |
| title_sort | effect of the anchoring and adjustment heuristic and optimism bias in stock market forecasts |
| topic | financial forecast optimism bias anchor and adjustment heuristic judgment behavioral finance |
| url | https://revfinypolecon.ucatolica.edu.co/article/view/2920 |
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