A Study on “the Impact of Behavioural Biases on Investment Decision-Making” with special reference to retail investors in Andhra Pradesh

Abstract

This research investigates the profound influence of behavioral biases on investment decision-making among retail investors in the Indian state of Andhra Pradesh, a region experiencing a rapid increase in participation in capital markets due to rising financial awareness, accessibility to digital platforms, and a shift toward individual wealth creation. While traditional financial theories such as the Efficient Market Hypothesis (EMH) assume that investors are rational actors who process all available information to make optimal financial decisions, a growing body of behavioral finance literature suggests otherwise. Human psychology, cognitive shortcuts (heuristics), emotional responses, and social influences often lead to systematic deviations from rationality, especially among retail investors who typically have limited financial literacy and are more prone to emotional decision-making.