Analytical study of behavioral dimensions of retail investors towards investment decision making & performance in stock market

Abstract

The purpose of this research study is to explore the behavioral dimensions specifically, representativeness, availability, anchoring, overconfidence, loss aversion, regret aversion, and herding biases of retail investors towards investment decision-making and their performance in the stock market. To achieve the research objectives, a survey questionnaire method was adopted to collect data from 467 retail investors using the convenience sampling technique. The study has used Structural Equation Modeling (SEM) approach to analyze the relationship between the predictor variables and investors’ behavior. The findings of the study suggest that Overconfidence Bias is the most significant predictor variable for individual investors’ behavior, followed by loss aversion, and then anchoring bias. In contrast, availability bias contributes the least to investors’ behavior. This study will be helpful in identifying and unraveling the irrational factors that affect investors’ decision-making processes, leading to better investment decisions and improved performance in the stock market.