The relevance of behavioral biases to investment decision and performance: a meta-analytic review
Qualitative Research in Financial Markets, 2025 (ESCI, Scopus)
- Publication Type: Article / Review
- Publication Date: 2025
- Doi Number: 10.1108/qrfm-09-2024-0280
- Journal Name: Qualitative Research in Financial Markets
- Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus
- Keywords: Cognitive biases, Emotional biases, Investment decision, Investment performance, Meta-analysis
- Dokuz Eylül University Affiliated: Yes
Abstract
Purpose Drawing on the inadequate attention devoted to understanding the relationship between behavioral biases and investment-related outcomes from a meta-analytic perspective, the main objective of this meta-analysis is to quantitatively synthesize empirical evidence covering the influence of behavioral biases (i.e. cognitive biases and emotional biases) on investment decision and investment performance. This meta-analytic investigation also aims to shed light on the moderating role of contextual factors, specifically economic development and national culture, in the theoretical associations among the constructs of interest. Design/methodology/approach A total of 128 effect sizes extracted from 42 empirical studies published in 34 academic journals between 2015 and 2024 were meta-analyzed. Findings This research demonstrates the significant impact of various types of cognitive and emotional biases on investment decisions and performance. Moreover, the meta-analytic findings reveal that the magnitude of the association between emotional biases and investment decisions is contingent on contextual factors. Originality/value Building on an important research and knowledge gap in the related literature, this meta-analysis offers fresh and worthwhile insights into the behavioral finance domain.