Comforting Investments are Rarely Profitable: Impediments in Investor Decision Making

Taqadus Bashir, Faisal Mehmood and Altamash Khan
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Taqadus Bashir: Associate Professor,
Faisal Mehmood: PhD Scholar,
Altamash Khan: PhD Scholar,

Global Social Sciences Review, 2019, vol. 4, issue 2, 71-82

Abstract: This research aims at testing and confirming existence of selected behavioral biases of investors that affect their decisions. Five behavioral biases affecting irrational behavior of investors were selected: overconfidence bias, illusion of control bias, confirmation bias and recency bias and optimism bias. Primary data was collected through a questionnaire from 300 investors from banks, insurance companies, stock exchanges etc. The results were obtained by employing a correlation and regression analysis for the presence of behavioral biases and to detect degrees of their influence on decision making. Correlation results indicate moderate association between behavioral biases and decisions of investors. Outcome of the research indicates that while making financial decisions investors are moderately affected by behavioral biases.

Keywords: Investment Decisions; Overconfidence; Illusion of Control; Optimism; Confirmation; Recency; Behavioral Biases (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:gss:journl:v:4:y:2019:i:2:p:71-82

DOI: 10.31703/gssr.2019(IV-II).07

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