EFFECT OF BEHAVIORAL BIASES ON INVESTORS’ INVESTMENT DECISIONS IN STOCK MARKET

Abstract

The primary objective of this study was to examine the effect of behavioral biases on investors’ investment decisions in the stock market. It aimed to understand how various behavioral factors influence decision-making processes among investors. The study employed a combination of descriptive and causal research designs. This research employed descriptive statistics, correlation analysis, and regression analysis to examine the data through SPSS version 26. This study indicates that investors believe that both herding factors and heuristic factors greatly influence their investment decisions, and they also perceive their decisions as highly significant. The correlation analysis reveals that the correlation analysis reveals that shows that there is significant position association between heuristic factors and investment decision. Similarly, prospect factors have significant positive relationship with investors’ investment decision. At the same time, there is significant positive association between market factors and investment decision. Moreover, correlation value between herding factors and the investment decision is significant positive. The regression analysis shows that there is significant positive effect of heuristic factors on investment decision. Then, there is also significant positive effect of prospect factors on investment decision. At the meantime, market factors have significant positive impact on investment decision. Finally, herding factors have significant positive effect on investment decision. Therefore, all the behavioral factors have significant impact on investors’ investment decision in stock market.