Behavioral Biases and Investment Performance: Does Gender Matter? Evidence from Amman Stock Exchange

Abstract

This study investigates the existence of behavioral biases in Amman Stock Exchange and their effect on investment performance from investor’s point of view. In specific, the effects of overconfidence bias, familiarity bias, loss aversion bias, disposition bias, availability bias, representativeness bias, confirmation bias and herding bias are investigated. Moreover, the study inspects whether the behavioral biases differ between males and females. The results show that there is a statistically significant effect of overconfidence bias, familiarity bias, availability bias, representativeness bias and herding bias on investment performance (p≤5%). Moreover, disposition bias, confirmation bias and loss aversion bias significantly affect investment performance but at a critical level of (p≤10%). No statistically significant differences are found between the answers of males and females.

Keywords: Behavioral Biases, Investment Performance, Gender, Overconfidence, Familiarity, Loss Aversion, Disposition, Availability, Representativeness, Confirmation, Herding, Amman Stock Exchange.