EFFECT OF OVERCONFIDENCE BIAS ON INVESTMENT DECISION MAKING - A STUDY

A. Arun Kumar, M. Babu

Abstract


Traditional finance assumes that investors would consider all the available information and take investment decision based on the rational grounds but behavioral finance takes into account irrationality of human behavior, human vulnerability, their unconscious mind and psychological factors. This research work aims to find out the possibility of psychological factors like risk perception and behavioral biases, having any influence over the investors’ decision making. In this aspect, this study particularly explores the overconfidence bias and its influence on investors, who invest in Indian stock markets. The study also explores the overconfidence relationship and its impact on self-attribution bias. This research work was based on primary data gathered by using a structured questionnaire. Results of the study indicated that the influence of overconfidence bias on investment decision making.

Keywords


Over Confidence, Risk perception, Self-attribution bias

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