Open AccessAn Analysis of Behavioral Biases in Investment Decision-Making
Author(s) -
Geetika Madaan,
Sanjeet Singh
Publication year - 2019
Publication title -
international journal of financial research
Language(s) - English
Resource type - Journals
eISSN - 1923-4031
pISSN - 1923-4023
DOI - 10.5430/ijfr.v10n4p55
Subject(s) - overconfidence effect , disposition effect , herding , herd behavior , behavioral economics , investment decisions , loss aversion , cognitive bias , investment (military) , psychology , prospect theory , descriptive statistics , anchoring , confirmation bias , actuarial science , economics , social psychology , finance , cognition , statistics , paleontology , context (archaeology) , mathematics , neuroscience , politics , political science , law , forestry , biology , geography
Individual investor’s behavior is extensively influenced by various biases that highlighted in the growing discipline of behavior finance. Therefore, this study is also one of another effort to assess the impact of behavioral biases in investment decision-making in National Stock Exchange. A questionnaire is designed and through survey responses collected from 243 investors. The present research has applied inferential statistics and descriptive statistics. In the existing study, four behavioral biases have been reviewed namely, overconfidence, anchoring, disposition effect and herding behavior. The results show that overconfidence and herding bias have significant positive impact on investment decision. Overall results conclude that individual investors have limited knowledge and more prone towards making psychological errors. The findings of the study also indicate the existence of these four behavioral biases on individual investment decisions. This study will be helpful to financial intermediaries to advice their clients. Further, study can be elaborated to study other behavioral biases on investment decisions.