IDEAS home Printed from https://ideas.repec.org/a/asi/ajoerj/v8y2018i3p99-109id4080.html
   My bibliography  Save this article

An Empirical Investigation of Investor’s Behavioral Biases on Financial Decision Making

Author

Listed:
  • Imran Umer Chhapra
  • Muhammad Kashif
  • Raja Rehan
  • Ashow Bai

Abstract

Investor’s irrationality is an inevitable reality that has been time and again highlighted by researchers (Statman, 2008). Therefore, this study is another effort to assess the role of behavioral biases in financial decision making in Pakistan Stock Exchange (PSX).A survey questionnaire is designed and used to collect responses using convenience sampling technique from sample of 250 investors of PSX. Behavioral biases include overconfidence, over thinking, herding, cognitive bias, and hindsight effect of investors. Multiple regression models are used to test influence of five behavioral biases on investment decision. The results show that overconfidence, over thinking, herding, cognitive bias, and hindsight effect have significant positive impact on investment decision. Overall results conclude that much change in investment decision is due to behavioral biases. This study will help financial advisors to better advice their clients. The one way to reduce these biases may be education and training of investors.

Suggested Citation

  • Imran Umer Chhapra & Muhammad Kashif & Raja Rehan & Ashow Bai, 2018. "An Empirical Investigation of Investor’s Behavioral Biases on Financial Decision Making," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 8(3), pages 99-109.
    • Handle: RePEc:asi:ajoerj:v:8:y:2018:i:3:p:99-109:id:4080
    as

    Download full text from publisher

    File URL: https://archive.aessweb.com/index.php/5004/article/view/4080/6352
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shashank Kathpal & Asif Akhtar & Asma Zaheer & Mohd Naved Khan, 2021. "Covid-19 and heuristic biases: evidence from India," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 26(4), pages 305-316, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:asi:ajoerj:v:8:y:2018:i:3:p:99-109:id:4080. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Robert Allen (email available below). General contact details of provider: https://archive.aessweb.com/index.php/5004/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.