Psychological Biases which influence Investment Decisions of Investors: A Comparative Study of Rohtak and Ambala City

Abstract

Decision-making can be defined as the process of choosing a particular alternative from many available alternatives. Investment Decision is usually based on different factors such as demographic and psychological factors. In this particular paper is based on psychological biases which influence investors. The study of Behavior or psychology of investors while making investment decision is known as Behavior finance. This study aims to investigate the impact of cognitive and emotional bias on the investor‟s financial decision. Investors are always assumed to be rational thinkers as per the traditional economic theories but the volatile market behavior has challenged the efficient market hypothesis. Behavioral finance is a newly developed approach in response to the difficulties faced by the traditional investors. Investment markets are becoming increasingly risky making the investors behave differently upon different market dynamic forces. Recent researches on individual investor‟s behavior have shown that people do not act rationally while making decisions, rather several factors influence their decisions. The present study is based on the psychological biases which influence individual investor‟s preferences of Rohtak and Ambala city. Data of 100 respondents have been collected through structured questionnaire from both cities. Chi-Square analysis tool have been employed by researcher with the help of SPSS software. The present study revealed that there is significant association between investors of Rohtak and Ambala on gender bases with respect to psychological biases.