The Impact of Behavioral Biases on Individuals’ Financial Choices under Uncertainty: An Empirical Approach

Joyita Banerji, Kaushik Kundu and Parveen Ahmed Alam

Business Perspectives and Research, 2023, vol. 11, issue 3, 401-424

Abstract: All human beings are limited by their knowledge and interpretative abilities, leading them to rely on more simplifications to make the decision-making more tractable. Kahneman and Tversky’s landmark work recognized that individuals’ choices often systematically deviate from the neo-classical expectations of rationality, and such deviations are known as behavioral biases. This article aims to examining how the behavioral biases relate to each other and impact the investment decision of individuals. The relationships between behavioral biases may be used to develop certain profiles of financial behavior, which the finance agents can use to provide more custom choices to their clients. The population for this study was the individual investors of the Indian financial markets and any individuals who may be prospective investors. A research instrument was created, for the sake of studying such association, the pilot survey of which revealed the items which were most reliable, which were retained and used for the final round of data collection. The analysis of the collected data revealed that there are relationships between the behavioral biases themselves. Based on such relationships, the biases were categorized and investor decision-making profiles were proposed.

Keywords: Behavioral finance; behavioral bias; decision-making under risk; choices under risk; financial markets (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/22785337221098287 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:busper:v:11:y:2023:i:3:p:401-424

DOI: 10.1177/22785337221098287

Access Statistics for this article

More articles in Business Perspectives and Research
Bibliographic data for series maintained by SAGE Publications ().