A Study on Choices and the Profile of the Brazilian Investor in the Decision-Making Process

The objective of this work was to show, through Prospect Theory (PT), a broader approach to finance and economics, which includes concepts of psychology and sociology, how agents, and particularly investors, are susceptible to deviations from rationality that directly impact their choices, making their decisions not always by the pillars that support classical theories of finance. The research was 382 Brazilian investors.  Through the questionnaire, it is observed how much a behavioral effect dramatically influences the choices of economic agents who are mostly men and ill-prepared academically. One of the important verifications found evaluating the answers of the 382 interviewees was about the investors' reaction; in case of a loss, we have that the interviewees prefer probable losses to the detriment of certain losses, even if smaller, and this fact helps to eliminate any explanation that can be given to the certainty effect in the sense that the aversion to volatility. More than 68% when answering some of the questions violated the precepts of the Expected Utility Theory. People opted for the answer with a positive and more significant standard deviation, demonstrating that they are not risk averse.  When the certainty of the result increases, the choice for assets with smaller standard deviation increases; in this case, we have evidence of a reduction in risk aversion.