Role of Cognitive Bias in Investment Decision Making

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dc.contributor.advisorDr. Suman Kamal Parajuli
dc.contributor.authorYagya Bahadur Ghimire
dc.date.accessioned2025-05-13T09:16:06Z
dc.date.available2025-05-13T09:16:06Z
dc.date.issued2024
dc.description.abstractThis study explores the influence of cognitive biases on investment decision-making among Nepalese investors, focusing on overconfidence bias, illusion of control bias, anchoring bias, and loss aversion bias. Using a descriptive research design, data were collected from 384 active investors in the Nepal Stock Exchange through structured questionnaires. The results reveal that cognitive biases significantly shape investment decisions, often leading to irrational behaviors and suboptimal outcomes. Overconfidence bias emerged as a dominant factor, with investors overestimating their predictive abilities and underestimating risks. Illusion of control bias was also prominent, as participants believed they could influence market outcomes, leading to excessive risk-taking. Anchoring bias reflected a fixation on initial reference points, such as purchase prices, while loss aversion bias highlighted a tendency to prioritize avoiding losses over potential gains, resulting in poor portfolio adjustments. The findings align with behavioral finance theories, particularly Prospect Theory, emphasizing the need for financial literacy programs and behavioral interventions. This study contributes to the behavioral finance literature, offering actionable recommendations to mitigate biases and foster rational investment practices, thereby enhancing market efficiency in Nepal.
dc.identifier.urihttps://hdl.handle.net/20.500.14540/24999
dc.language.isoen_US
dc.publisherShanker Dev Campus
dc.titleRole of Cognitive Bias in Investment Decision Making
dc.typeThesis
local.academic.levelMasters
local.affiliatedinstitute.titleShanker Dev Campus
local.institute.titleFaculty of Management
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