Behavioral Finance Biases in Investment Decision Making

Muhammad Atif Sattar; Muhammad Toseef; Muhammad Fahad Sattar

doi:doi:10.11648/j.ijafrm.20200502.11

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Behavioral Finance Biases in Investment Decision Making

Muhammad Atif Sattar, Muhammad Toseef, Muhammad Fahad Sattar

Published in International Journal of Accounting, Finance and Risk Management (Volume 5, Issue 2)

Received: 11 September 2019 Accepted: 27 March 2020 Published: 14 April 2020

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Abstract

Traditional finance suggests that investments made by rational behaviors investors examine risk and return before decision making to gain maximum profit later behavioral finance challenge traditional finance and introduce psychological factors affect decision making. The aim of this research paper is to explore how behavioral biases affect investment decision making under uncertainty. Dependent variable investment decision making is a composite activity, it never be made in a vacuity by depending on personal resources. Based on this study investment choices alternatives influence by human rational and irrational behavior, therefore, examine the impact of behavioral finance in the decision-making process. Behavioral finance phenomenon variables; heuristic, prospects, personality characteristics, feeling, moods and ecological factors explore under this research. Overconfidence, Representativeness, Anchoring, Regret Aversion, Hindsight, Herding Effect and Home Bias included in investors psychology behaviors. Survey questionnaire tool used to collect sample to conduct quantitative research. To test the hypothesis Regression analysis run by the SPS software. Findings revealed that there was an effect of behavioral biases on investment decisions. Empirical results concluded investment decision making influenced by heuristic behaviors more than prospects and personality characteristics. The originality of this study, it is very beneficial for investors and financial institutions to make decision by observation of psychological factors.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 5, Issue 2)
DOI	10.11648/j.ijafrm.20200502.11
Page(s)	69-75
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Behavioral Finance, Decision Making, Heuristic, Prospects, Big Five Personality Characteristics

References

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APA Style

Muhammad Atif Sattar, Muhammad Toseef, Muhammad Fahad Sattar. (2020). Behavioral Finance Biases in Investment Decision Making. International Journal of Accounting, Finance and Risk Management, 5(2), 69-75. https://doi.org/10.11648/j.ijafrm.20200502.11

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ACS Style

Muhammad Atif Sattar; Muhammad Toseef; Muhammad Fahad Sattar. Behavioral Finance Biases in Investment Decision Making. Int. J. Account. Finance Risk Manag. 2020, 5(2), 69-75. doi: 10.11648/j.ijafrm.20200502.11

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AMA Style

Muhammad Atif Sattar, Muhammad Toseef, Muhammad Fahad Sattar. Behavioral Finance Biases in Investment Decision Making. Int J Account Finance Risk Manag. 2020;5(2):69-75. doi: 10.11648/j.ijafrm.20200502.11

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@article{10.11648/j.ijafrm.20200502.11,
  author = {Muhammad Atif Sattar and Muhammad Toseef and Muhammad Fahad Sattar},
  title = {Behavioral Finance Biases in Investment Decision Making},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {5},
  number = {2},
  pages = {69-75},
  doi = {10.11648/j.ijafrm.20200502.11},
  url = {https://doi.org/10.11648/j.ijafrm.20200502.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20200502.11},
  abstract = {Traditional finance suggests that investments made by rational behaviors investors examine risk and return before decision making to gain maximum profit later behavioral finance challenge traditional finance and introduce psychological factors affect decision making. The aim of this research paper is to explore how behavioral biases affect investment decision making under uncertainty. Dependent variable investment decision making is a composite activity, it never be made in a vacuity by depending on personal resources. Based on this study investment choices alternatives influence by human rational and irrational behavior, therefore, examine the impact of behavioral finance in the decision-making process. Behavioral finance phenomenon variables; heuristic, prospects, personality characteristics, feeling, moods and ecological factors explore under this research. Overconfidence, Representativeness, Anchoring, Regret Aversion, Hindsight, Herding Effect and Home Bias included in investors psychology behaviors. Survey questionnaire tool used to collect sample to conduct quantitative research. To test the hypothesis Regression analysis run by the SPS software. Findings revealed that there was an effect of behavioral biases on investment decisions. Empirical results concluded investment decision making influenced by heuristic behaviors more than prospects and personality characteristics. The originality of this study, it is very beneficial for investors and financial institutions to make decision by observation of psychological factors.},
 year = {2020}
}

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TY - JOUR
T1 - Behavioral Finance Biases in Investment Decision Making
AU - Muhammad Atif Sattar
AU - Muhammad Toseef
AU - Muhammad Fahad Sattar
Y1 - 2020/04/14
PY - 2020
N1 - https://doi.org/10.11648/j.ijafrm.20200502.11
DO - 10.11648/j.ijafrm.20200502.11
T2 - International Journal of Accounting, Finance and Risk Management
JF - International Journal of Accounting, Finance and Risk Management
JO - International Journal of Accounting, Finance and Risk Management
SP - 69
EP - 75
PB - Science Publishing Group
SN - 2578-9376
UR - https://doi.org/10.11648/j.ijafrm.20200502.11
AB - Traditional finance suggests that investments made by rational behaviors investors examine risk and return before decision making to gain maximum profit later behavioral finance challenge traditional finance and introduce psychological factors affect decision making. The aim of this research paper is to explore how behavioral biases affect investment decision making under uncertainty. Dependent variable investment decision making is a composite activity, it never be made in a vacuity by depending on personal resources. Based on this study investment choices alternatives influence by human rational and irrational behavior, therefore, examine the impact of behavioral finance in the decision-making process. Behavioral finance phenomenon variables; heuristic, prospects, personality characteristics, feeling, moods and ecological factors explore under this research. Overconfidence, Representativeness, Anchoring, Regret Aversion, Hindsight, Herding Effect and Home Bias included in investors psychology behaviors. Survey questionnaire tool used to collect sample to conduct quantitative research. To test the hypothesis Regression analysis run by the SPS software. Findings revealed that there was an effect of behavioral biases on investment decisions. Empirical results concluded investment decision making influenced by heuristic behaviors more than prospects and personality characteristics. The originality of this study, it is very beneficial for investors and financial institutions to make decision by observation of psychological factors.
VL - 5
IS - 2
ER -

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Author Information

Muhammad Atif Sattar

Department of Management & Economics, University of Science and Technology, Kunming, China
Muhammad Toseef

Department of Management & Economics, University of Science and Technology, Kunming, China
Muhammad Fahad Sattar

Department of Management & Economics, University of Science and Technology, Kunming, China

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Plain Text BibTeX RIS

APA Style

Muhammad Atif Sattar, Muhammad Toseef, Muhammad Fahad Sattar. (2020). Behavioral Finance Biases in Investment Decision Making. International Journal of Accounting, Finance and Risk Management, 5(2), 69-75. https://doi.org/10.11648/j.ijafrm.20200502.11

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ACS Style

Muhammad Atif Sattar; Muhammad Toseef; Muhammad Fahad Sattar. Behavioral Finance Biases in Investment Decision Making. Int. J. Account. Finance Risk Manag. 2020, 5(2), 69-75. doi: 10.11648/j.ijafrm.20200502.11

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AMA Style

Muhammad Atif Sattar, Muhammad Toseef, Muhammad Fahad Sattar. Behavioral Finance Biases in Investment Decision Making. Int J Account Finance Risk Manag. 2020;5(2):69-75. doi: 10.11648/j.ijafrm.20200502.11

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@article{10.11648/j.ijafrm.20200502.11,
  author = {Muhammad Atif Sattar and Muhammad Toseef and Muhammad Fahad Sattar},
  title = {Behavioral Finance Biases in Investment Decision Making},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {5},
  number = {2},
  pages = {69-75},
  doi = {10.11648/j.ijafrm.20200502.11},
  url = {https://doi.org/10.11648/j.ijafrm.20200502.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20200502.11},
  abstract = {Traditional finance suggests that investments made by rational behaviors investors examine risk and return before decision making to gain maximum profit later behavioral finance challenge traditional finance and introduce psychological factors affect decision making. The aim of this research paper is to explore how behavioral biases affect investment decision making under uncertainty. Dependent variable investment decision making is a composite activity, it never be made in a vacuity by depending on personal resources. Based on this study investment choices alternatives influence by human rational and irrational behavior, therefore, examine the impact of behavioral finance in the decision-making process. Behavioral finance phenomenon variables; heuristic, prospects, personality characteristics, feeling, moods and ecological factors explore under this research. Overconfidence, Representativeness, Anchoring, Regret Aversion, Hindsight, Herding Effect and Home Bias included in investors psychology behaviors. Survey questionnaire tool used to collect sample to conduct quantitative research. To test the hypothesis Regression analysis run by the SPS software. Findings revealed that there was an effect of behavioral biases on investment decisions. Empirical results concluded investment decision making influenced by heuristic behaviors more than prospects and personality characteristics. The originality of this study, it is very beneficial for investors and financial institutions to make decision by observation of psychological factors.},
 year = {2020}
}

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