INVESTMENT PSYCHOLOGICAL BIASES IN THE UNITED STATES AND ITALY

Alan Wong
Indiana University Southeast

Barbara Alemanni
SDA Bocconi School of Management and University of Genoa, Italy

ABSTRACT

Traditional finance is rooted in the standard utility theory. However, a relatively new
field, behavioral finance, argues that some investment decisions are affected by psychological
biases, rendering them not optimal. This study explores ten such psychological biases across the
United States (U .S.) and Italy, with the objective of exploring whether the two countries display
different behavioral biases and to what degree they are different. Utilizing data collected by a
survey, the results show the presence of investment psychological tendencies in both the U.S. and
Italy. These biases can influence investment behavior in a positive or negative manner. There are
also some differences between selected biases in the two countries. The results also show that
gender and individual cultural characteristics can also have an impact on investment biases
present in the country in question.

Keywords: Investment psychological, cultural characteristics, behavioral finance, United States, Italy