Financial Decisions in the Light of Behavioral Economy

a Comparative Study of Students of Undergraduate Programs in Economy and Administration at a Federal Brazilian University

DOI: https://doi.org/10.18359/rfce.5551
Keywords: behavioral finances, prospective theory, cognitive biases, mental shortcuts
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Abstract

In this article, the seminal study of Kahneman and Tversky (1979) called “prospective theory” is being replicated with the objective of understanding how the students who are finishing their undergraduate studies in Economy and Administration at a federal Brazilian university make financial decisions under uncertain and risk-taking conditions. Behavioral finances are a recent area of finances based on prospective theory, whose objective is to explain “irrational” decisions from the investors caused by emotional factors that modern financial theory sometimes is not able to solve. Through a field research, a 27-question survey was evaluated to assess decision making under different conditions. The analysis of the results was carried out by comparing the results from the current survey with the seminal survey. The results confirm the existence of the effects proposed in the prospective theory, as well as the interference of cognitive biases. It was also concluded that the students at the end of the courses make biased decisions independently from having a higher level of education.

Author Biographies

Débora Cristiane Pena Lima Kaizer, Universidade Federal Rural do Rio de Janeiro (UFRRJ)

Bacharel em Administração, Universidade Federal Rural do Rio de Janeiro-Instituto Multidisciplinar, Nova Iguaçu, Brasil.

Eduardo de Sá Fortes Leitão Rodrigues, Universidade Federal Rural do Rio de Janeiro (UFRRJ)

PhD student in Economics at the Lisbon School of Economics & Management (University of Lisbon). Graduated in Economic Sciences and Master in Business Economics from Candido Mendes University. Professor of Finance in the Administration and Tourism courses at the Federal Rural University of Rio de Janeiro (UFRRJ). Professional approved in the ANBIMA CPA 20 Certification Examination. He worked as a consultant in analysis of investment projects, risk management and also as professor of the undergraduate and master's degrees at Candido Mendes University, Serra dos Órgãos University Center and the Regional Council of Economics (1st Region) ). Experience in the areas of Economics and Finance, with interest in the following subjects: Stochastic Dynamic Model of General Equilibrium (DSGE), Behavioral Economics and Mathematical Programming Applied to Risk Management.

Ariele Silva Moreira Rodrigues Ferreira, Centro Federal de Educação Tecnológica Celso Suckow da Fonseca (CEFET/RJ)

Academic Master's (ongoing) in Regional Development and Productive Systems from the Federal Center for Technological Education Celso Suckow da Fonseca (CEFET/RJ), with a teaching and research scholarship from the Coordination for the Improvement of Higher Education Personnel (CAPES). Post-graduation (ongoing) in Management and Teaching in Higher Education and also in MBA in Administration, Accounting and Finance, both by the Brazilian Union of Faculties (UNIBF). Bachelor of Business Administration from the Federal Rural University of Rio de Janeiro (UFRRJ). Administration Technician from the Support Foundation for the Technical School of the State of Rio de Janeiro (FAETEC).

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Author Biographies

Débora Cristiane Pena Lima Kaizer, Universidade Federal Rural do Rio de Janeiro (UFRRJ)

Bacharel em Administração, Universidade Federal Rural do Rio de Janeiro-Instituto Multidisciplinar, Nova Iguaçu, Brasil.

Eduardo de Sá Fortes Leitão Rodrigues, Universidade Federal Rural do Rio de Janeiro (UFRRJ)

PhD student in Economics at the Lisbon School of Economics & Management (University of Lisbon). Graduated in Economic Sciences and Master in Business Economics from Candido Mendes University. Professor of Finance in the Administration and Tourism courses at the Federal Rural University of Rio de Janeiro (UFRRJ). Professional approved in the ANBIMA CPA 20 Certification Examination. He worked as a consultant in analysis of investment projects, risk management and also as professor of the undergraduate and master's degrees at Candido Mendes University, Serra dos Órgãos University Center and the Regional Council of Economics (1st Region) ). Experience in the areas of Economics and Finance, with interest in the following subjects: Stochastic Dynamic Model of General Equilibrium (DSGE), Behavioral Economics and Mathematical Programming Applied to Risk Management.

Ariele Silva Moreira Rodrigues Ferreira, Centro Federal de Educação Tecnológica Celso Suckow da Fonseca (CEFET/RJ)

Academic Master's (ongoing) in Regional Development and Productive Systems from the Federal Center for Technological Education Celso Suckow da Fonseca (CEFET/RJ), with a teaching and research scholarship from the Coordination for the Improvement of Higher Education Personnel (CAPES). Post-graduation (ongoing) in Management and Teaching in Higher Education and also in MBA in Administration, Accounting and Finance, both by the Brazilian Union of Faculties (UNIBF). Bachelor of Business Administration from the Federal Rural University of Rio de Janeiro (UFRRJ). Administration Technician from the Support Foundation for the Technical School of the State of Rio de Janeiro (FAETEC).

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How to Cite
Pena Lima Kaizer, D. C., de Sá Fortes Leitão Rodrigues, E., & Silva Moreira Rodrigues Ferreira, A. (2021). Financial Decisions in the Light of Behavioral Economy: a Comparative Study of Students of Undergraduate Programs in Economy and Administration at a Federal Brazilian University. Revista Facultad De Ciencias Económicas, 29(2), 225–248. https://doi.org/10.18359/rfce.5551
Published
2021-10-06
Issue
Vol. 29 No. 2 (2021)
Section
Artículos