IDEAS home Printed from https://ideas.repec.org/a/ris/jabema/021898.html
   My bibliography  Save this article

Impact of behavioral biases on investment decision making and mediating effect of risk perception

Author

Listed:
  • Biswajit Acharjya

    (Birla Global University, India)

  • Basanta Kumar

    (Academic, Research and Legal Consultant, India)

  • Shakti R. Mohapatra

    (Biju Patanaik University of Technology, India)

Abstract

The purpose of the study is to analyze the impact of behavioral biases—anchoring, loss aversion, overconfidence, disposition and regret aversion—on investment decision making, and the mediating role of risk perception between the biases and investment decisions. Using data from over 500 retail investors trading in the stock and FOREX market, multiple hypotheses were tested. The results indicate that the anchoring effect, availability heuristics, disposition effect, and overconfidence significantly impact investment decisions, whereas loss aversion and regret aversion have a significant adverse impact on investment decisions. Further, risk perception serves as a complete mediator between the overconfidence heuristic and investing decisions. Implication for investors is that behavioral biases can impair the quality of investment decisions, and risk perception can improve their quality.

Suggested Citation

  • Biswajit Acharjya & Basanta Kumar & Shakti R. Mohapatra, 2022. "Impact of behavioral biases on investment decision making and mediating effect of risk perception," Journal of the Academy of Business and Emerging Markets, Academy of Business and Emerging Markets, vol. 2(2), pages 3-14.
    • Handle: RePEc:ris:jabema:021898
    DOI: 10.5281/zenodo.7089682
    as

    Download full text from publisher

    File URL: https://www.abem.ca/x/JABEM-2022-V2N2-1.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.5281/zenodo.7089682?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:ris:jabema:021898. 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: Satyendra Singh (email available below). General contact details of provider: https://www.abem.ca .

    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.