Evaluation of Behavioral Biases and Investment Decision: An Evidence from Pakistan Stock Exchange (PSX)

Muhammad Afzal, Abdul Rasheed and Khalil-Ur-Rehman
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Muhammad Afzal: PhD Scholar, Institute of Business Administration, Khawaja Fareed University of Engineering and Information Technology, Rahim Yar Khan, Pakistan
Abdul Rasheed: Assistant Professor, Institute of Business Administration, Khawaja Fareed University of Engineering and Information Technology, Rahim Yar Khan, Pakistan
Khalil-Ur-Rehman: Assistant Professor, Institute of Business Administration, Khawaja Fareed University of Engineering and Information Technology, Rahim Yar Khan, Pakistan

Bulletin of Business and Economics (BBE), 2023, vol. 12, issue 4, 126-134

Abstract: Investors act irrationally while making decisions according to research in the subject of behavioral finance. The main goal of this study is to assess the behavioral biases that influence the choices made by individual equities investors from Punjab. For investors agents, and other market participants, this study is useful and aids in making better investment decisions. The study takes into account the private investors who buy common stocks in the Pakistani province of Punjab. The Fuzzy Analytical Hierarchy Process (F-AHP) is used to examine the behavioral biases that influence certain common stock investors' choices. The familiarity bias optimism bias herding bias mental accounting bias loss aversion bias regret aversion bias availability bias anchoring bias representative bias and overconfidence bias are the most prevalent behavioral biases taken into account in this study. Mental accounting bias herding bias anchoring bias and representational prejudice were the four factors that had the greatest impact. I prefer to invest in the well-known companies that have wider media coverage (C101) was one of the top six sub-criteria. The financial effects of my choices are better than I anticipated (C96). The financial ramifications of my choices turn out to be immediate" (C95). The company's news (from newspapers, television, and magazines) influences my investment choice (C84). “My investment for purchasing new stock is totally based on information released regarding the stock (C43). I have particular skills and experience for decision making (C13).

Keywords: Behavioral biases; Irrational behavior; Investment decisions; Fuzzy Analytic Hierarchy Process (FAHP) (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:rfh:bbejor:v:12:y:2023:i:4:p:126-134

DOI: 10.61506/01.00094

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