Investors' Expertise, Personality Traits and Susceptibility to Behavioral Biases in the Decision Making Process

The aim of this paper is to investigate the degree of susceptibility to behavioral biases (the certainty effect, the sunk cost fallacy, and mental accounting) among people of various levels of expertise in market invesments and to determine whethere this susceptibility is correlated with certain personality traits (impulsivity, venturesomeness, and empathy). The study includes 200 participats: 100 retail investors who regularly invest in the Warsaw Stock Exchange and 100 students of the Warsaw School of Economics who are casually invoved in investing.In this study, employing a survey methodology, we conducted a laboratory experiment that allowed us to isolate behavioral biases and personality traits and measure their influence on investors,decision-making processes. The participants filled out questionnaires containing teo parts: 1) three situational exercises, which assessed susceptibility to behavioral biases, and 2) the Impulsivity, Venturesomeness, Emoathy Questionnaire (IVE) Questionnaire in which maeasures three personality traits (impulsivity, venturesomeness, and empathy). Statistical ananlyses demonstrated that susceptibility to bahavioral biases depends on the level of expertise in market investing such that expertise increases susceptibility to behavioral biases. Some pe soni ityrtraits influenced the participants'likelihood of displaying these biases.