Research
Impact of Psychological Biases on the Performance of UCITS before and After the Tunisian Revolution
The aim of this paper is twofold. First, it proposes to determine the irrational behavior of Undertakings for Collective Investment in Transferable Securities (UCITS henceforth) by looking into psychological biases. Second, it proposes to study the impact of these psychological biases on the performance of Tunisian UCITS during the February 2005 to December 2015 period. To this end, we used two methods; qualitative and quantitative methods. Through a questionnaire, the results indicate that 35% of the managers of UCITS in Tunisia are not rational. Their decision-making is often influenced by the following biases: herding, fear, heuristics and anchoring. The results also indicate that this irrational behavior did not significantly change after the Tunisian revolution. Accordingly, in order to measure the effect of these biases on performance, we developed a composite model that groups together the studied psychological biases. We found that despite the moderate presence of these psychological biases, they tend to explain the performance of Tunisian UCITS, only before the revolution. Some of these biases, like regret aversion, positively affect performance. Other biases, like herding, anchoring, disposition effect and loss aversion, negatively affect UCITS performance.
