Behavioral Finance : The Student Investor
Bachelor thesis within Business Administration
Title: Behavioral Finance – The Student Perspective
Authors: Kamran Sairafi, Karl Selleby, Thom Ståhl
Tutor: Urban Österlund
Background: History is full of examples on how humans can create investment
bubbles through speculation; from the Dutch tulip mania to the
Dot Com bubble humans have proven to be capable of creating
economical chaos. Classical economical theories hold the assumption
that individuals act rationally regarding decisions of an
economical nature. Since the information on the stock market is
available to everyone who seeks it, the appearance of investment
bubbles should not be possible. Behavioral finance is an academic
branch which seeks to explore these phenomenons through the
psychological factors affecting humans in investment decisions.
Purpose: The purpose of the report is twofold. Firstly it is to examine the
characteristics of investment interested business students enrolled
at Jönköping International Business School. Secondly it looks into
the decision-making process and choices of the population
from the perspective of behavioral finance.
Method: This research holds an abductive approach and is based on qualitative
data. Data collection was done through an Internet-based
questionnaire containing several different questions on the areas
related to the inquiries. In some cases statistical analysis was conducted
to test for significant correlation between key characteristics.
Results: A statistically proven correlation could be discerned between
trading experience and frequency; for each additional year an individual
engaged in trading the frequency increased. Herd behavior
was detected in a majority of the sample. When faced with a
scenario in which their immediate surrounding opposed their own
analysis of a stock, the greater part of the sample would reconsider
their position. Two main sub-groups were detected. The first
was characterized by its high tolerance of risk; the second subgroup
was characterized by its inconsistency in behavior.
Conclusions: This paper found that the behavior of respondents in the chosen
population was best described as “student behavior”; a somehow
irrational behavior explained by the learning process in which
business students exist.
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