Heuristics and behavioral biases of autonomous investment agents

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Ícaro Coelho Ferreira
José Vitor Kohler
https://orcid.org/0000-0002-5035-4013
Jeferson Lana
https://orcid.org/0000-0002-9787-1114
Eleandra Maria Prigo Meneghini
Ana Paula Pereira dos Passos
https://orcid.org/0000-0003-0684-8582

Abstract

This study investigated the behavior of Autonomous Investment Agents (AAI) from an investment brokerage, examining whether their decisions are rational or influenced by mental shortcuts. Employing a quantitative and cross-sectional approach, 107 responses were collected from a total of 280 AAI through a questionnaire. The results highlighted the confirmation of seven biases and heuristics, such as regret aversion (76%) and anchoring (63%). These findings underscore the importance of managers and AAI being aware of these influences, effectively guiding decision-making. This study contributes to behavioral finance literature by identifying relevant mental shortcuts in AAI decision-making, providing valuable insights to enhance management practices and financial strategies, with potential positive impacts on investment decisions.

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Long Paper