Can we escape cognitive biases? Historical simulation of different investor profiles on the IBEX 35

Identifier:  TFG:10227

Handle: https://hdl.handle.net/20.500.11797/TFG10227

Authors:  Puchal Bosch, Mario

Abstract:
This bachelor's thesis analyzes the impact of cognitive biases on investment, contrasting neoclassical rationality with Kahneman and Tversky's prospect theory. Through a simulation based on the IBEX 35 (2010–2024), four investor profiles are compared: rational, biased, mitigated, and opportunistic. The results demonstrate that excessive activity driven by psychological impulses, along with transaction costs, negatively affects profitability. While the rational profile stands out for its efficiency, the opportunistic strategy succeeds in reducing volatility. The study concludes that operational discipline and quantitative rules are key to mitigating biases and consistently optimizing financial results.