An Analysis of Behavioral Biases in Investment Decision-Making

DOI

10.2991/978-94-6463-612-3_2How to use a DOI?

Keywords

Investment decisions; Behavioral biases; Cognitive biases; Emotional Biases

Abstract

This study investigates the impact of cognitive and emotional biases on the investment decisions of individual investors in Chhattisgarh. Data were gathered from 100 participants through a comprehensive survey questionnaire that evaluated cognitive biases, including overconfidence, anchoring, confirmation bias, availability bias, and loss aversion, in addition to emotional biases such as fear of missing out (FOMO), herding behavior, regret aversion, and overoptimism. The descriptive analysis indicated varying levels of these biases among the participants, revealing prevalent behavioral trends in their investment decision-making processes. Correlation analysis indicated moderate positive associations between these biases and investment choices, while ANOVA findings demonstrated significant differences in decision-making based on the severity of cognitive and emotional biases. The regression analysis highlighted the predictive influence of these biases, illustrating their role in shaping investors’ decisions, including risk perception, portfolio composition, and overall investment performance. The study reinforces the importance of behavioral finance in explaining investor behavior, while its practical recommendations emphasize the need for educating investors and employing behavioral strategies to reduce the influence of biases. While this study offers valuable insights, it also recognizes limitations, including the relatively small sample size and restricted applicability, which point to potential areas for additional investigation. Future studies could examine the effects of cultural, technological, and interdisciplinary factors on behavioral finance to gain a deeper understanding of the mechanisms influencing investor decision-making. In summary, the results add to the expanding body of knowledge in behavioral finance, improving comprehension of how biases impact financial choices in the marketplace.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Aanchal Sharma
AU  - Bhavna Prajapati
PY  - 2024
DA  - 2024/12/31
TI  - An Analysis of Behavioral Biases in Investment Decision-Making
BT  - Proceedings of the 5th International Conference on the Role of Innovation, Entrepreneurship and Management for Sustainable Development (ICRIEMSD-2024)
PB  - Atlantis Press
SP  - 3
EP  - 16
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-612-3_2
DO  - 10.2991/978-94-6463-612-3_2
ID  - Sharma2024
ER  -