Behavioural Factors Influence on Investment Decisions

Andrieta Shintia Dewi (), Nugraha Nugraha, Imas Purnamasari, Maya Sari, Agus Rahayu and Lili Adi Wibowo
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Andrieta Shintia Dewi: Universitas Pendidikan Indonesia
Nugraha Nugraha: Universitas Pendidikan Indonesia
Imas Purnamasari: Universitas Pendidikan Indonesia
Maya Sari: Universitas Pendidikan Indonesia
Agus Rahayu: Universitas Pendidikan Indonesia
Lili Adi Wibowo: Universitas Pendidikan Indonesia

A chapter in Proceedings of the 8th Global Conference on Business, Management, and Entrepreneurship (GCBME 2023), 2024, pp 24-29 from Springer

Abstract: Abstract In making decisions, investors display irrational behaviour. The decision-making process is considered cognitive, as investors must choose based on various available options. According to the findings, various psychological/behavioural factors negatively impacted the investors’ decision-making. The current research was conducted to determine the influence of behavioural factors on investors’ investment decisions. Five behavioural factors, namely overconfidence bias, representative bias, regret aversion, mental accounting, and herd behaviour, were considered to examine investors’ behavioural biases. The cohort for this study comprised Kerala investors, and the analytical hierarchy process (AHP) was utilized to determine the impact of behavioural factors on investment decisions. Based on the priority vector, it was determined that overconfidence bias and regret aversion substantially impacted Kerala’s investors. The influence of group behaviour on their decision-making decreased.

Keywords: Behavioural finance; overconfidence bias; representative bias; regret aversion; mental accounting; herd behaviour; Investment Decision (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-443-3_4

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DOI: 10.2991/978-94-6463-443-3_4

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