An Empirical Study on the Influence of Behavioral Biases on Investment Decisions in Delhi NCR

Abstract

Purpose: The finance industry was hesitant to accept the psychologist’s point of view, which championed the notion of behavioral finance. “Daniel Kahneman and Amos Tversky” considered behavioral finance. According to traditional financial theory, fund managers do not always make sensible financial judgments. Behavioral elements such as greed and fear have an impact on investing. These psychological elements must be considered as risk considerations while making financial decisions. Overconfidence bias, herding bias, representativeness bias, anchoring bias, and other behavioral stereotypes have been sought to explain using psychological finance. The purpose of this study is to understand the frequency analysis for behavioral variables.

Design/Methodology/Approach: The questionnaire was developed using a survey of the literature. The accuracy and quality of the questionnaire were evaluated using pilot test behavioral and Cronbach’s Alpha. After sifting the replies, the survey was emailed to 500 people, and the data was analyzed using statistical methods.

Findings: The goal of the study is to investigate the relationship between demographic characteristics and financial behaviour biases, as well as the relationship between financial behaviour biases and investment decisions. The findings revealed a substantial relationship between the demographic variable and differences in investment behaviour.

Originality/Value: This paper will benefit all investors to understand the biases that they unknowingly face while taking or making any financial investment decisions.

Paper Type: Empirical Research Paper