Behavioral biases of investors on the Warsaw Stock Exchange – an analysis of the impact of demographics and investment experience

Purpose: The aim of the study was to identify the most common behavioral errors made by investors on the Warsaw Stock Exchange and to understand how demographic factors and investment experience influence the occurrence of these errors. This could contribute to better tailoring of investment strategies and financial education for investors. Design/methodology/approach: The theoretical part of the study draws on a critical literature review, whereas the empirical one employs a diagnostic survey based on a questionnaire as a research tool. To analyse the data, descriptive statistics were obtained and a correlation study was performed. Findings: The study found that confirmation bias (58%) is the most common behavioral error, followed by a tendency to quickly close profitable investments (50%) and a strong aversion to losses (48%). Men are more likely to exhibit biases like confirmation and outcome bias, while women tend to show hindsight bias and the illusion of knowledge. Younger investors (18-40 years) are more prone to overconfidence and outcome bias, while those with higher education are more likely to commit confirmation and outcome biases. Experienced investors are less prone to these errors, suggesting that experience helps manage emotions and improve decision- making. Research limitations/implications: The study's limitations include potential response bias and its focus on the Warsaw Stock Exchange, which limits generalizability. Future research could explore broader groups and use qualitative methods for deeper insights into investor motivations. Practical implications: The findings suggest that financial institutions should develop educational programs to help investors avoid behavioral errors, ultimately improving investment outcomes and market stability. Originality/value: The originality of the study lies in its behavioral approach, emphasizing emotions, cognitive biases, and investment experience, offering valuable insights for investors, advisors, analysts, and researchers in behavioral economics. Keywords: behavioral finance, investors, behavioral biases, investments, stock exchange. Category of the paper: Research paper.