Heuristics Influence on Investment Decision Making at Pakistan Stock Exchange: Mediation of Digital Financial Literacy and Moderation of AI Adoption

Purpose: The objective of this inquiry is to evaluate the role of cognitive biases such as the availability heuristic, ostrich heuristic, gambler’s fallacy, herding heuristic played. The study also tries to estimate how digital financial literacy works as a mediator since those who have higher digital skills will be able to interpret and evaluate the financial information more effectively while mitigating cognitive errors. Additionally, the paper considers how the increasing applicability of AI in investment frameworks can diminish the role of cognitive heuristics based on analysis by Susskind and Susskind (2015). Using this interdisciplinary oculus, the present research seeks to explore the primary motivations for investment decision making in developing market contexts.Design/Methodology/Approach: The Researchers will use the links between the variables studied to make Structural Equation Modeling (SEM) using SmartPLS 4.0 and Spss for demographic characteristics. For analysis of complex relationships between a number of variables, which include direct, indirect, and moderating effect, the Structural Equation Modeling is especially suitable. The quanitative cross sectional study is utilized to deduce heuristic and UTAUT theories.Findings: All heuristic biases and their effect on investment decision making are seen as positive. From the mediating analysis, the results revealed that an effective digital financial literacy limits the heuristics’ negative impacts. The moderation findings also show that adoption of AI further embeds the connection between heuristics except ostrich bias and investment behaviour, indicating how AI can help vary the expression.Implications/Originality/Value: The theoretical and practical implications of these study findings are meaningful. Theoretically, this study adds value to the study of behavioral finance by offering empirical evidence for the impact of different heuristic biases such availability, ostrich, gambler’s fallacy, herding, loss aversion on investment decisions in the context of an emerging market such as Pakistan Stock Exchange (PSX).&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&