Emotional Biases and Individual Investors: An Exploratory Study

Abstract

The current research focuses on the effect of emotional biases on the investment decision-making process among individual investors of India. This article is steered by conducting a survey on 631 individual investors of India participating in Indian stock market. Through a structured questionnaire as a research instrument, the study gauges behavioural biases of individual investors. An exploratory study by nature, the analysis of the study supports evidence establishing the adverse nature of behavioral biases affecting investment analysis and further their decision-making. The research implies a statistically significant association among behavioural biases and investment related decisions. The findings are significant for all the stakeholders of Indian stock markets, be it investors, financial advisors, industry experts and others indulged in the process of asset management or portfolio construction. This study can act as an aid towards informed investment decisions by analysing the vulnerability of investors associated with emotional biases.