Analysis of the Anchoring Heuristic Effect in the Brazilian Stock Market

Samuel Roveda Astolfi de Matos; Reisoli Bender Filho

doi:10.5020/2318-0722.2025.31.e17169

Authors

Samuel Roveda Astolfi de Matos Federal University of Santa Maria, Santa Maria, Rio Grande do Sul, Brazil https://orcid.org/0000-0001-7430-5542
Reisoli Bender Filho Federal University of Santa Maria, Santa Maria, Rio Grande do Sul, Brazil https://orcid.org/0000-0002-1019-4414

DOI:

https://doi.org/10.5020/2318-0722.2025.31.e17169

Keywords:

behavioral finance, heuristics, anchoring, financial market

Abstract

This study investigates the presence and effect of the anchoring heuristic on stock trading in the Brazilian stock market between 2017 and 2020. To this end, a panel data estimation model was applied to a sample of fifty stocks included in the Bovespa Index. Using two dummy variables representing breakouts above the highest prices and below the lowest prices recorded over the previous fifty-two weeks, we tested the hypothesis that past prices influence market participants’ decision-making, leading to deviations in trading volume from expected levels. The findings indicate that, following breakouts above previous price highs, abnormal trading volume tended to decline, whereas breaches below previous price lows resulted in an increase in abnormal trading volume. These results support the assumptions of behavioral finance and the anchoring heuristic by demonstrating that investors use specific price levels as anchors when making buy and sell decisions. The presence of anchoring suggests that investors are influenced by factors that are not necessarily relevant to the accurate valuation of financial assets, making them susceptible to systematic errors that may ultimately lead to inferior investment outcomes relative to market performance over a given period.

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Translation

This article is a translation in English of the article: Análise do Efeito da Heurística Comportamental da Ancoragem no Mercado Acionário Brasileiro

Author Biographies

Samuel Roveda Astolfi de Matos, Federal University of Santa Maria, Santa Maria, Rio Grande do Sul, Brazil

BA in Economics from Federal University of Santa Maria.

Reisoli Bender Filho, Federal University of Santa Maria, Santa Maria, Rio Grande do Sul, Brazil

BA in Economics from University of Santa Cruz do Sul (2003), MSc in Economics from Pontifical Catholic University of Rio Grande do Sul (2006), and PhD in Applied Economics from Federal University of Viçosa (2011). He is currently an Associate Professor in the Department of Economics and International Relations and a permanent faculty member of the stricto sensu Graduate Program in Public Organization Management at Federal University of Santa Maria.

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