The Beliefs’ Heterogeneity of Investors in Tunisian Stock Market

Abstract

The beliefs’ heterogeneity of investors reflects the disagreement on the information interpretation. This article proposes to explain and appreciate the potential contribution of the beliefs’ heterogeneity concept to the assimilation of the information interpretation process by investors.

The article especially examines if the investors have a heterogeneous beliefs through the study of their behavior biases. It is the presence of different biases correlated with each other, which leads to the beliefs’ heterogeneity of investor. The separated study of the different behavioral biases does not conduct to the understanding of the complexity and the diversity of beliefs.

In fact, the paper tries to explain if the behavioral anomalies that characterize the investors in their decision-making on the stock market constitute the determinants of the heterogeneity of the beliefs of the investor and concretize his irrationality. Through a typological analysis, it was shown that investors do not make a homogenous group and that in the majority of the cases, they show irrationality in their investment decisions.

Keywords: Behavioral Finance, Individuals’ Decision-making, Psychological Variables, Behavioral biases, Typological analysis

JEL Classification: G4, G41