Scale Development and Exploration in Representativeness Bias Intervening Investment and Financial Decisions
Abstract
This research aims to explore the antecedents behind the generation of representativeness bias of investors in the Stock Market of Pakistan, as well as develop its scale. Schwab (1980)’s three-step analysis has been adopted; i.e. item establishment, scale development and scale assessment. 30 interviews were conducted and 250 questionnaires were distributed among brokers and investors of the Stock Market of Pakistan. The results indicate that stock market experts and investors can experience representativeness bias due to being, Overwhelmed by Recent Information, Misinterpretation of Chance and Misuse of Faith in Intuition. By confirming the causes of Representativeness bias, Security and Exchange Commission of Pakistan can control said bias by providing workshops, leading to an improved economy
Authors
Altamash Khan
Ph.D. Scholar, Department of Management Sciences, Bahria University, Islamabad, Pakistan
Taqadus Bashir
Associate Professor, Department of Management Sciences, Bahria University, Islamabad, Pakistan
Keywords
Representativeness Bias, Stock Market, Scale Development