Behavioural Biases and Investor Decisions

Authors

  • Raja Rehan
  • Imran Umer

Abstract

The paper examines the impact of behavioural biases (i.e. cognitive and emotional biases) on investor decisions at the Pakistan Stock Exchange. The data was collected from a sample of 385 active investors in the stock market through a pre-tested questionnaire adapted from Chaffai & Medhioub (2014). The results suggest that five behavioural biases (i.e. anchoring, risk aversion, overconfidence, representativeness and regret aversion) have a positive and significant influence on investor decisions in Pakistan. On the contrary, two behavioural biases (i.e. mental accounting and availability) do not have a statistically significant impact on investor decisions. The findings imply that behavioural factors have a profound effect on investor decisions as argued by behavioural finance theorists.Keywords: Behavioural Finance, Behavioural Biases, Investor Decisions.

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Published

2017-12-13

Issue

Vol. 12 No. 2 (2017): Market Forces Research Journal Volume 12 No 2

Section

Articles

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