Heuristics and Stock Buying Decision: Evidence from Brazil, Pakistan, and Malaysia Stock Markets

Abstract

Applying both qualitative and quantitative approaches, we investigate the influence of anchoring and adjustment, representativeness, and availability heuristics on stock buying decisions of individual investors at the Brazilian stock market and their relations with demographic aspects. We also compared the results with investors from Pakistan and Malaysia. To collect the data, a survey was administered. Data were analyzed by description, correlation, and regression analysis. The results show that all three heuristics are likely to affect the Brazilian investor’s stock buying decisions. The effect of heuristics is similar across genders, type of subscriber, and level of education groups. However, for the older group and those with income higher than BRL15,000.00 per month (about USD 3,000.00), the anchoring heuristic exhibit a more extreme effect. From these findings, this paper reveals the presence of the heuristics in stock market decisions in developing countries, such as Brazil, as well as Pakistan and Malaysia. However, the effect on Asian’ individual investors is more prevalent.