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Comforting Investments are Rarely Profitable: Impediments in Investor Decision Making

Author

Listed:
  • Taqadus Bashir

    (Associate Professor,)

  • Faisal Mehmood

    (PhD Scholar,)

  • Altamash Khan

    (PhD Scholar,)

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.

Suggested Citation

  • Taqadus Bashir & Faisal Mehmood & Altamash Khan, 2019. "Comforting Investments are Rarely Profitable: Impediments in Investor Decision Making," Global Social Sciences Review, Humanity Only, vol. 4(2), pages 71-82, June.
    • Handle: RePEc:gss:journl:v:4:y:2019:i:2:p:71-82
    DOI: 10.31703/gssr.2019(IV-II).07
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    More about this item

    Keywords

    Investment Decisions; Overconfidence; Illusion of Control; Optimism; Confirmation; Recency; Behavioral Biases;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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