Impact of behavioral biases on investment decision making and mediating effect of risk perception
The purpose of the study is to analyze the impact of behavioral biases—anchoring, loss aversion, overconfidence, disposition and regret aversion—on investment decision making, and the mediating role of risk perception between the biases and investment decisions. Using data from over 500 retail inves...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Academy of Business and Emerging Markets
2022-09-01
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| Series: | Journal of the Academy of Business and Emerging Markets |
| Subjects: | |
| Online Access: | https://doi.org/10.5281/zenodo.7089682 |
| _version_ | 1827379741372448768 |
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| author | Biswajit Acharjya Basanta Kumar Shakti R. Mohapatra |
| author_facet | Biswajit Acharjya Basanta Kumar Shakti R. Mohapatra |
| author_sort | Biswajit Acharjya |
| collection | DOAJ |
| description | The purpose of the study is to analyze the impact of behavioral biases—anchoring, loss aversion, overconfidence, disposition and regret aversion—on investment decision making, and the mediating role of risk perception between the biases and investment decisions. Using data from over 500 retail investors trading in the stock and FOREX market, multiple hypotheses were tested. The results indicate that the anchoring effect, availability heuristics, disposition effect, and overconfidence significantly impact investment decisions, whereas loss aversion and regret aversion have a significant adverse impact on investment decisions. Further, risk perception serves as a complete mediator between the overconfidence heuristic and investing decisions. Implication for investors is that behavioral biases can impair the quality of investment decisions, and risk perception can improve their quality. |
| first_indexed | 2024-03-08T13:22:26Z |
| format | Article |
| id | doaj.art-432715cc6a9b4cc6aa3d91432023101d |
| institution | Directory Open Access Journal |
| issn | 2563-6960 |
| language | English |
| last_indexed | 2024-03-08T13:22:26Z |
| publishDate | 2022-09-01 |
| publisher | Academy of Business and Emerging Markets |
| record_format | Article |
| series | Journal of the Academy of Business and Emerging Markets |
| spelling | doaj.art-432715cc6a9b4cc6aa3d91432023101d2024-01-17T23:32:21ZengAcademy of Business and Emerging MarketsJournal of the Academy of Business and Emerging Markets2563-69602022-09-012231410.5281/zenodo.7089682Impact of behavioral biases on investment decision making and mediating effect of risk perceptionBiswajit Acharjya0https://orcid.org/0000-0002-3814-4144Basanta Kumar1https://orcid.org/0000-0003-3339-7481Shakti R. Mohapatra2https://orcid.org/0000-0002-1717-482XBirla Global University, IndiaAcademic, Research and Legal Consultant, IndiaBiju Patanaik University of Technology, IndiaThe purpose of the study is to analyze the impact of behavioral biases—anchoring, loss aversion, overconfidence, disposition and regret aversion—on investment decision making, and the mediating role of risk perception between the biases and investment decisions. Using data from over 500 retail investors trading in the stock and FOREX market, multiple hypotheses were tested. The results indicate that the anchoring effect, availability heuristics, disposition effect, and overconfidence significantly impact investment decisions, whereas loss aversion and regret aversion have a significant adverse impact on investment decisions. Further, risk perception serves as a complete mediator between the overconfidence heuristic and investing decisions. Implication for investors is that behavioral biases can impair the quality of investment decisions, and risk perception can improve their quality.https://doi.org/10.5281/zenodo.7089682anchoring effectbehavioral biasesdecision-makingloss aversionoverconfidence |
| spellingShingle | Biswajit Acharjya Basanta Kumar Shakti R. Mohapatra Impact of behavioral biases on investment decision making and mediating effect of risk perception Journal of the Academy of Business and Emerging Markets anchoring effect behavioral biases decision-making loss aversion overconfidence |
| title | Impact of behavioral biases on investment decision making and mediating effect of risk perception |
| title_full | Impact of behavioral biases on investment decision making and mediating effect of risk perception |
| title_fullStr | Impact of behavioral biases on investment decision making and mediating effect of risk perception |
| title_full_unstemmed | Impact of behavioral biases on investment decision making and mediating effect of risk perception |
| title_short | Impact of behavioral biases on investment decision making and mediating effect of risk perception |
| title_sort | impact of behavioral biases on investment decision making and mediating effect of risk perception |
| topic | anchoring effect behavioral biases decision-making loss aversion overconfidence |
| url | https://doi.org/10.5281/zenodo.7089682 |
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