A conceptual framework on individual investors’ learning behavior in the context of stock trading: An integrated perspective

The objective of the paper is to introduce a conceptual framework for the study of learning behavior of an individual investor in the context of stock trading. It is developed based on the review of behavioral finance literature, and insights from cognitive, behavioral and social learning theories and related empirical evidence. The framework recognizes the investor as an entity that learns consciously and/or unconsciously for continually updating its perspectives underlying stock trading. The intentional or consciousness form of learning occurs as individual learning through reflection of past trading experiences whereas the learning happens unconsciously as social learning through inquiry and imitating the others’ behaviors. These learning processes are expected to be affected by interaction of various structures and processes, both internal and external to the investor, such as cognitive, affective, social and behavioral ones. Accordingly, the framework suggests five hypotheses to examine the determinants of these learning behaviors and to assess whether the investors learn over passage of time through the effects of these structures and processes. It promotes primary data-based behavioral finance empirical studies to track dynamics involved in learning, which could provide new insights on such behavior predicted by the adaptive market hypothesis.