Risk Aversion Bias and Investment Decision: A Meta-Analysis

Abstract: This paper examines the relationship between risk aversion bias and investment decisions through the meta-correlation analysis. In addition to studying this relationship, we also sought to identify the main factors influencing it. Through a systematic technique, 8 quantitative studies were identified and analysed (random-effects models, subgroup analyses identified the overall impact size and heterogeneity) and found a significant, moderately positive relationship between risk aversion and investment decisions (r = 0.4, p = 0.0021). While a significant relationship was found, the analysis also revealed substantial heterogeneity among the study outcomes, suggesting that numerous other factors, such as demographic characteristics, financial literacy, social factors, other behavioural biases, and financial status, influence investment decisions. Keywords: Risk Aversion Bias, Investment Decisions, Meta-Analysis, Behavioural Bias. JEL Classification Number: G32, G11