Evaluating The Connection of Behavioral Biases and Investment Decisions of Equity Market Investors Using SEM Approach

2021 ◽  
Vol 7 (5) ◽  
pp. 2766-2776
Author(s):  
Nidhi Jain ◽  
Bikrant Kesari
Keyword(s):  
Decision Making ◽  
Structural Equation ◽  
Self Control ◽  
Path Model ◽  
Cognitive Effect ◽  
Short Term ◽  
Behavioral Bias ◽  
Stock Investment ◽  
Stock Market Investors

Objective: The key objective of the paper is to study the magnitude of the disparity in actions between stock holders for short-term and long-term. Methods: Investor traits and how the judgement on investments and behavioral bias are interconnected are contrasted by using a systemic model, as well as to compare relative behavioral bias variations including Framing Bias, Endowment Bias, Representative Bias, Cognitive Dissonance Bias, Self-Control Bias and Overconfidence Bias. Distinguishing evidence of behavioral characteristics that are normally related to investment venture helps to provide assessments and confine trading techniques. Results: Between July 2020 and August 2020, the cognitive effect of investor decision-making is contrasted via test review of 300 substantive responders from deliberate Indian stock market investors. Taking into account the structural equation modelling (SEM), a route study is carried out of the manner in which stock investment and proposed behavioral inclinations are concomitant. Conclusions: Observational outcomes suggest that the systemic path model deliberately correlates with the survey content, demonstrating the influence of behavioral discrimination in decision-making for individual investments. Our results also indicate that short-term and long-term investors’ behavioral patterns vary substantially.

scholarly journals Why hasn’t evolution selected for perfect self-control?

2018 ◽  
Author(s):  
Benjamin Hayden
Keyword(s):  
Decision Making ◽  
Cognitive Control ◽  
Learning Processes ◽  
Decision Makers ◽  
Self Control ◽  
Subjective Feeling ◽  
Obvious Reason ◽  
Control Failures

Self-control refers to the ability to deliberately reject tempting options and instead select ones that produce greater long-term benefits. Although some apparent failures of self-control are, on closer inspection, reward maximizing, at least some self-control failures are clearly disadvantageous and non-strategic. The existence of poor self-control presents an important evolutionary puzzle because there is no obvious reason why good self-control should be more costly than poor self-control. After all, a rock is infinitely patient. I propose that self-control failures result from cases in which well-learned (and thus routinized) decision making strategies yield suboptimal choices. These mappings persist in the decision-makers’ repertoire because they result from learning processes that are adaptive in the broader context, either on the timescale of learning or of evolution. Self-control, then, is a form of cognitive control and the subjective feeling of effort likely reflects the true costs of cognitive control. Poor self-control, in this view, is ultimately a result of bounded optimality.

scholarly journals Post-Acquisition Performance of Emerging Market Firms: A Multi-Dimensional Analysis of Acquisitions in India

2021 ◽  
Vol 14 (12) ◽  
pp. 567
Author(s):  
Arindam Das
Keyword(s):  
Structural Equation ◽  
Emerging Market ◽  
Empirical Studies ◽  
Short Term ◽  
Firm Level ◽  
Acquisition Performance ◽  
Long Term Performance ◽  
Term Performance ◽  
A Performance

M&A performance is a multifaceted, compound construct with no overarching factor that captures all different dimensions. This paper examines the concept of acquisition performance and proposes a model that links firm-level factors and transaction parameters with firms’ short-term and long-term performance, extending to financial-, market- and innovation measures. Building on past empirical studies on the influence of various factors on M&A performance, a multi-dimensional structural equation model has been developed and it has been tested with a dataset on acquisitions in the Indian technology sector over a period of ten years. The results suggest that: (a) smaller acquirers with higher book value and leveraged firms demonstrate better long-term performance; (b) contrary to established understanding, short-term market returns are not influenced by deal parameters; (c) majority stake purchases show relatively lesser gains—suggesting the possible presence of post-acquisition integration issues and, (d) acquirers with high intangible assets continue to do well on innovation performance post-acquisition. By indicating situations and conditions under which an acquisition would potentially lead to a performance gain for the acquirer, these results provide significant insight to practitioners pursuing M&As for growth opportunities.

scholarly journals Altering gain of the infralimbic-to-accumbens shell circuit alters economically dissociable decision-making algorithms

2018 ◽  
Vol 115 (27) ◽  
pp. E6347-E6355 ◽  
Author(s):  
Brian M. Sweis ◽  
Erin B. Larson ◽  
A. David Redish ◽  
Mark J. Thomas
Keyword(s):  
Decision Making ◽  
Information Processing ◽  
Synaptic Transmission ◽  
Self Control ◽  
Nucleus Accumbens Shell ◽  
Synaptic Remodeling ◽  
Reward Seeking ◽  
Deliberative Processes ◽  
Reward Valuation

The nucleus accumbens shell (NAcSh) is involved in reward valuation. Excitatory projections from infralimbic cortex (IL) to NAcSh undergo synaptic remodeling in rodent models of addiction and enable the extinction of disadvantageous behaviors. However, how the strength of synaptic transmission of the IL–NAcSh circuit affects decision-making information processing and reward valuation remains unknown, particularly because these processes can conflict within a given trial and particularly given recent data suggesting that decisions arise from separable information-processing algorithms. The approach of many neuromodulation studies is to disrupt information flow during on-going behaviors; however, this limits the interpretation of endogenous encoding of computational processes. Furthermore, many studies are limited by the use of simple behavioral tests of value which are unable to dissociate neurally distinct decision-making algorithms. We optogenetically altered the strength of synaptic transmission between glutamatergic IL–NAcSh projections in mice trained on a neuroeconomic task capable of separating multiple valuation processes. We found that induction of long-term depression in these synapses produced lasting changes in foraging processes without disrupting deliberative processes. Mice displayed inflated reevaluations to stay when deciding whether to abandon continued reward-seeking investments but displayed no changes during initial commitment decisions. We also developed an ensemble-level measure of circuit-specific plasticity that revealed individual differences in foraging valuation tendencies. Our results demonstrate that alterations in projection-specific synaptic strength between the IL and the NAcSh are capable of augmenting self-control economic valuations within a particular decision-making modality and suggest that the valuation mechanisms for these multiple decision-making modalities arise from different circuits.

scholarly journals FACTORS ASSOCIATED WITH MORTALITY AMONG LONG-TERM CARE RESIDENTS TRANSITIONING TO AND FROM EMERGENCY DEPARTMENTS

2019 ◽  
Vol 3 (Supplement_1) ◽  
pp. S821-S821
Author(s):  
Kaitlyn C Tate ◽  
Colin Reid ◽  
Patrick McLane ◽  
Garnet E Cummings ◽  
Brian H Rowe ◽  
...  
Keyword(s):  
Decision Making ◽  
Emergency Departments ◽  
Structural Equation ◽  
Organizational Context ◽  
Long Term Care ◽  
Care Transitions ◽  
Equation Modeling ◽  
Term Care ◽  
Risk Of Death

Abstract Studies examining risk of death during acute care transitions have highlighted potential predictors of death during transition. However, they have not closely examined the relationships and directional effects of organizational context, care processes, resident demographics and health conditions on death during transition. By employing structural equation modeling, we aimed to 1) identify predictive factors for residents who died during transitions from long term care (LTC) to emergency departments (EDs) and back; 2) examine relationships between identified organizational, process and resident factors with resident death during these transitions; and 3) identify areas for further investigation and improvement in practice. We tracked every resident transfer from 38 participating LTC facilities to two included EDs in two Western Canadian provinces from July 2011 to July 2012. Overall, 524 residents were involved in 637 transfers of whom 63 residents (12%) died during the transition. Sustained dyspnea (in both LTC and the ED), sustained change in level of consciousness (LOC) and severity measured by triage score were direct and significant predictors of resident death during transition. The model fit the data, (x2 = 83.77, df = 64, p = 0.049) and explained 15% variance in resident death. Dyspnea and change in LOC in both LTC and ED needs to be recognized regardless of primary reason for transfer. More research is needed to determine the specific influences of LTC ownership models, family involvement in decision-making, LTC staff decision-making on resident death during transition, and interventions to prevent pre-death transfers.

Long-Term Decision-Making: Biological and Psychological Evidence

2009 ◽  
Vol 9 (3) ◽  
pp. 9-19 ◽  
Author(s):  
Thomas Princen
Keyword(s):  
Decision Making ◽  
Time Horizon ◽  
Cultural Factors ◽  
Structural Factors ◽  
Short Term ◽  
Environmental Decision Making ◽  
Human Decision ◽  
Psychological Evidence ◽  
Widespread Belief

A central conundrum in the need to infuse a long-term perspective into climate policy and other environmental decision-making is the widespread belief that humans are inherently short-term thinkers. An analysis of human decision-making informed by evolved adaptations—biological, psychological and cultural—suggests that humans actually have a long-term thinking capacity. In fact, the human time horizon encompasses both the immediate and the future (near and far term). And yet this very temporal duality makes people susceptible to manipulation; it carries its own politics, a politics of the short term. A “legacy politics” would extend the prevailing time horizon by identifying structural factors that build on evolved biological and cultural factors.

Intertemporal bargaining predicts moral behavior, even in anonymous, one-shot economic games

2013 ◽  
Vol 36 (1) ◽  
pp. 78-79
Author(s):  
George Ainslie
Keyword(s):  
Control Problem ◽  
Prisoner’S Dilemma ◽  
Moral Behavior ◽  
Self Control ◽  
Test Case ◽  
Effective Solution ◽  
Moral Choice ◽  
Short Term ◽  
Economic Games

AbstractTo the extent that acting fairly is in an individual's long-term interest, short-term impulses to cheat present a self-control problem. The only effective solution is to interpret the problem as a variant of repeated prisoner's dilemma, with each choice as a test case predicting future choices. Moral choice appears to be the product of a contract because it comes from self-enforcing intertemporal cooperation.

scholarly journals Consumer purchase decision: factors that influence impulsive purchasing

2020 ◽  
Vol 18 (4) ◽  
pp. 196-219 ◽  
Author(s):  
Thayná Aparecida Lehmann ◽  
Juliano Krug ◽  
Christian Daniel Falaster
Keyword(s):  
Structural Equation ◽  
Self Control ◽  
Equation Modeling ◽  
Purchase Decision ◽  
Buying Behavior ◽  
Decision Factors ◽  
Impulsive Buying ◽  
The Individual ◽  
Buying In

Objective: The aim of this study was to identify whether spending self-control and long-term orientation influence impulsive buying behavior, and also to understand the variables that may cause individuals to decrease impulsivity.Method: A quantitative survey was carried out to gather data regarding how individuals think and what they consider when buying in order to understand impulsive buying behavior at the time of purchase. Data were analyzed through structural equation modeling using the SmartPLS 2.0 M3 software.Relevance: It is important to understand which elements may influence impulsive buying behavior, as the motivation that causes consumers to behave impulsively seems to be still poorly defined. Thus, we seek to figure out a portion of this act that transcends the rational and logical choices in the act of purchase.Results: Impulsive buying behavior is analyzed in different ways by various scholars. The results of the present study indicate that impulsive purchases occur when the individual has lack of self-control over what he/she buys. This situation can be controlled if the person has a long-term guidance. This fact tends to influence spending self-control and consequently decreasing the levels of impulsiveness.Theoretical contributions: This study contributes to Rook Fisher's (1995) impulsive buying behavior studies, seeking to insert elements such as long-term orientation and spending self-control to better understand the effect of impulsivity and its causes.

scholarly journals COVID-19 containment policies through time may cost more lives at metapopulation level

2020 ◽  
Author(s):  
Konstans Wells ◽  
Miguel Lurgi
Keyword(s):  
Health Care ◽  
Decision Making ◽  
Health Care Systems ◽  
Informed Decision ◽  
Mitigation Strategies ◽  
Disease Spread ◽  
Informed Decision Making ◽  
Short Term ◽  
Care Systems

AbstractThe rapid and pandemic spread of COVID-19 has led to unprecedented containment policies in response to overloaded health care systems. Disease mitigation strategies require informed decision-making to ensure a balance between the protection of the vulnerable from disease and the maintenance of global economies. We show that temporally restricted containment efforts, that have the potential to flatten epidemic curves, can result in wider disease spread and larger epidemic sizes in metapopulations. Longer-term rewiring of metapopulation networks or the enforcement of feasible long-term measures that decrease disease transmissions appear to be more efficient than temporarily restricted intensive mitigation strategies (e.g. short-term mass quarantine). Our results may inform balanced containment strategies for short-term disease spread mitigation in response to overloaded health care systems and longer-term epidemiological sizes.

Does underconfidence matter in short-term and long-term investment decisions? Evidence from an emerging market

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maqsood Ahmad
Keyword(s):  
Decision Making ◽  
Stock Exchange ◽  
Emerging Market ◽  
Investment Decision ◽  
Investment Decisions ◽  
Investment Strategies ◽  
Short Term ◽  
Content Type ◽  
Investment Decision Making

PurposeThe purpose of this article is to clarify the mechanism by which underconfidence heuristic-driven bias influences the short-term and long-term investment decisions of individual investors, actively trading on the Pakistan Stock Exchange.Design/methodology/approachInvestors' underconfidence has been measured using a questionnaire, comprising numerous items, including indicators of short-term and long-term investment decision. In order to establish the influence of underconfidence on the investment decisions in both the short and long run, a 5-point Likert scale questionnaire has been used to collect data from the sample of 203 investors. The collected data were analyzed using SPSS and AMOS graphics software. Hypotheses were tested using structural equation modeling technique.FindingsThis article provides further empirical insights into the relationship between heuristic-driven biases and investment decision-making in the short and long run. The results suggest that underconfidence bias has a markedly negative influence on the short-term and long-term decisions made by investors in developing markets. It means that heuristic-driven biases can impair the quality of both short-term and long-term investment decisions.Practical implicationsThis article encourages investors to avoid relying on cognitive heuristics, namely, underconfidence or their feelings when making short-term and long-term investment strategies. It provides awareness and understanding of heuristic-driven biases in investment management, which could be very useful for finance practitioners' such as investor who plays at the stock exchange, a portfolio manager, a financial strategist/advisor in an investment firm, a financial planner, an investment banker, a trader/broker at the stock exchange or a financial analyst. But most importantly, the term also includes all those persons who manage corporate entities and are responsible for making its financial management strategies. They can improve the quality of their decision-making by recognizing their behavioral biases and errors of judgment, to which we are all prone, resulting in more appropriate investment strategies.Originality/valueThe current study is the first to focus on links between underconfidence bias and short-term and long-term investment decision-making. This article enhanced the understanding of the role that heuristic-driven bias plays in the investment management and more importantly, it went some way toward enhancing understanding of behavioral aspects and their influence on the investment decision-making in an emerging market. It also adds to the literature in the area of behavioral finance specifically the role of heuristics in investment strategies; this field is in its initial stage, even in developed countries, while, in developing countries, little work has been done.

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