Debiasing investors with decision support systems: An experimental investigation

Authors:
Gokul Bhandari;Khaled Hassanein;Richard Deaves
Affiliations:
Department of Management Science & Marketing, Odette School of Business, University of Windsor, ON Canada;Information Systems Area, DeGroote School of Business, McMaster University, Hamilton, ON Canada;Finance and Business Economics Area, DeGroote School of Business, McMaster University, Hamilton, ON Canada
Venue:
Decision Support Systems
Year:
2008

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Abstract

This research presents evidence that decision support systems can play an important role in debiasing behaviorally-challenged investors. An empirical study involving 119 participants provides strong evidence for the existence of cognitive biases in investment decision making and demonstrates the effectiveness of decision aids in lowering the negative impact of such biases on the ability of investors to make sound investment decisions. Additionally, such decision aids are shown to be more valuable in decision environments where the bias level is likely to be higher.