scholarly journals THE IMPACT OF OVERCONFIDENCE BIAS ON PERSONAL INVESTMENT DECISIONS: THE CASE OF NORTH MACEDONIA

2020 ◽  
Author(s):  
Shenaj Hadzimustafa ◽  
Nermine Shabani
Keyword(s):  
Decision Making ◽  
Cognitive Biases ◽  
Investment Decision ◽  
Financial Behavior ◽  
Level Of Education ◽  
Investment Decision Making ◽  
Key Factor ◽  
Emotional Bias ◽  
Overconfidence Bias ◽  
The Impact

The "Financial Behavior" in the field of "decision making" is the topic that awarded the economist Richard H. Thaler the Nobel Prize in 2017. According to him, after many investigations made on human decisions, it is noticed that they often depend on nature, intuition, habits, cognitive biases, emotional biases which lead the investor to wrong decisions. Given that the investments play an important and central role in the economy, the main purpose of the paper is to analyze the investment decision making process based on emotional bias, or more specifically the overconfidence bias. This study captures the impact of gender, and level of education on overconfidence during investment decision making in North Macedonia. The results show that investors' decisions were significantly influenced by the overconfidence bias. Although men and women are found to be overconfident, studies have shown that the degree of overconfidence varies among them and men are more overconfident than women. Also, overconfidence increases with the level of education. Based on the results certain recommendations are provided in order to assist future investment decision-making processes by notifying and eliminating the overconfidence bias identified during this research as a key factor leading to wrong and failing, non-rational investment decision making.

scholarly journals Impact of Heuristics on Investment Decisions: The Moderating Role of Locus of Control

2020 ◽  
Vol 5 (1) ◽  
pp. 1-14
Author(s):  
Jeetendra Dangol ◽  
Rashmita Manandhar
Keyword(s):  
Decision Making ◽  
Locus Of Control ◽  
Investment Decision ◽  
Investment Decisions ◽  
Sampling Procedure ◽  
Moderating Effect ◽  
Moderation Effect ◽  
Investment Decision Making ◽  
Overconfidence Bias ◽  
The Impact

This paper aims to assess the impact of heuristics on the investment decision by analysing the effect of four heuristic biases, i.e., representativeness, availability, anchoring and adjustment, and overconfidence bias on rationality of Nepalese investor's investment decision-making and also examines the moderating effect of the internal locus of control in between. The study used 391 respondents based on a convenient sampling procedure, and structured questionnaire survey. The study result indicates that there is a significant relationship between irrationality in investment decision-making and all four heuristic biases. In addition, the study also concludes that locus of control has significant moderating effect in the relationship between investment decisions and three heuristic biases, i.e., availability, representative and anchoring bias. However, the study documents no moderation effect in case of relationship with overconfidence bias.

scholarly journals Impact of Behavioral Biases on Investment Decision Making with Moderating Role of Financial Literacy

2018 ◽  
Vol 6 (2) ◽  
pp. 34-41
Author(s):  
Rizwan Khalid ◽  
◽  
Muhammad Javed ◽  
Khurram Shahzad ◽  
◽  
...  
Keyword(s):  
Decision Making ◽  
Financial Literacy ◽  
Positive Impact ◽  
Investment Decision ◽  
Structure Questionnaire ◽  
Investment Decision Making ◽  
Overconfidence Bias ◽  
The Impact ◽  
Moderating Role

The objective of this study is to examine the Impact of Overconfidence bias and Herding bias on Investment Decision Making with Moderating Role of Financial Literacy. The population was Investor, Employee and Graduate Student. A sample of 200 was selected using convenience technique. Data were collected through structure questionnaire adopted from different papers. Correlation and Regression analysis were performed to examine the result. The Results show that overconfidence bias and herding bias have a positive impact on investment decision making and Financial Literacy has positive impact on investment decision making. Based on the results and discussions of the study findings as well as the limitations, theoretical and practical implications of the study have been provided.

scholarly journals Research on Power Grid Investment Assistant Decision Model Adapting to Power Reform Situation

2020 ◽  
Vol 218 ◽  
pp. 02026
Author(s):  
Yidi Wan ◽  
Wei Xie ◽  
Haihong Du ◽  
Wenming Pan ◽  
Jianqing Li ◽  
...  
Keyword(s):  
Decision Making ◽  
Investment Decision ◽  
Power Grid ◽  
Scale Structure ◽  
Leading Role ◽  
Investment Decision Making ◽  
Investment Structure ◽  
External Management ◽  
Power Grid Planning ◽  
The Impact

in order to thoroughly implement the new energy security strategy of “four revolutions and one cooperation”, meet the requirements of power grid planning and management of energy administration, realize the strategic objectives of State Grid Corporation of China, actively respond to the severe external economic situation, alleviate the impact of policy-based price reduction, and improve the performance of internal investment management, the company needs scientific front-end decision-making, improve the efficiency of investment decision-making, scientifically determine the investment scale, structure and timing, and play a strategic leading role in investment decision-making. Through the analysis of internal and external management requirements, this paper constructs an auxiliary decision-making model of power grid investment to support the determination of investment scale, structure and time sequence, to realize the reasonable investment scale calculation of provincial companies, the calculation of investment structure of different voltage levels and the optimization of project delivery under the condition of given investment scale, which comprehensively considers the external supervision, economic development and internal management objectives, so as to assist the prior investment decision-making, improve the input-output efficiency, effectively improve the Advisory decision-making ability of investment data, and meet the company’s investment decision-making needs.

scholarly journals Animal spirits: Keynes' theory of rational investment decision-making under conditions of fundamental uncertainty

2009 ◽  
Vol 52 (1) ◽  
pp. 17-44
Author(s):  
Ognjen Radonjic
Keyword(s):  
Decision Making ◽  
Economic Crisis ◽  
Investment Decision ◽  
The Other ◽  
Investment Activity ◽  
Animal Spirits ◽  
Investment Decision Making ◽  
Key Factor ◽  
Fundamental Uncertainty ◽  
Rational Investment

Keynes's term, animal spirits, has been mistakenly confused with irrational decision-making. However, if we accept Keynes' assumption that future is fundamentally uncertain and nonergodic, animal spirits become key factor that makes continual process of investment decision-making possible. On the other hand, if animal spirits blunt, investment activity dwindles and makes emergence of deep economic crisis likely.

scholarly journals The use of tools and approaches of system dynamics in the analysis of the efficiency of BIM implementation and its impact on the management and planning of investments in the construction sector

2019 ◽  
Vol 279 ◽  
pp. 01011
Author(s):  
Martin Hotový
Keyword(s):  
Decision Making ◽  
System Dynamics ◽  
Dynamic Model ◽  
Investment Decision ◽  
Construction Sector ◽  
Strategic Investment ◽  
Investment Projects ◽  
Investment Decision Making ◽  
Proposed Model ◽  
The Impact

This paper presents the use of tools and approaches of system dynamics in the analysis of the efficiency of BIM tools implementation in relation to the management and planning of investments in the construction sector. The dynamic model based on the approach of system dynamics allows to simulate the impact rate (range) of BIM implementation in strategic investment decision-making in the construction sector. Based on the analysis, the key parameters critically affecting the large construction investment projects are determined. The proposed model is implemented as a submodel in the dynamic model designed for potential refinements in the strategic planning of the extent of investments into projects of civil infrastructure of the Czech Republic. The model allows to test different strategies in the virtual world before their implementation. The prediction of future developments based on the proposed model allows to streamline planning and decision-making processes.

scholarly journals An Analysis of Behavioral Biases in Investment Decision-Making

2019 ◽  
Vol 10 (4) ◽  
pp. 55 ◽  
Author(s):  
Geetika Madaan ◽  
Sanjeet Singh
Keyword(s):  
Decision Making ◽  
Positive Impact ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Decisions ◽  
Individual Investors ◽  
Behavioral Biases ◽  
Investment Decision Making ◽  
Survey Responses ◽  
The Impact

Individual investor’s behavior is extensively influenced by various biases that highlighted in the growing discipline of behavior finance. Therefore, this study is also one of another effort to assess the impact of behavioral biases in investment decision-making in National Stock Exchange. A questionnaire is designed and through survey responses collected from 243 investors. The present research has applied inferential statistics and descriptive statistics. In the existing study, four behavioral biases have been reviewed namely, overconfidence, anchoring, disposition effect and herding behavior. The results show that overconfidence and herding bias have significant positive impact on investment decision. Overall results conclude that individual investors have limited knowledge and more prone towards making psychological errors. The findings of the study also indicate the existence of these four behavioral biases on individual investment decisions. This study will be helpful to financial intermediaries to advice their clients. Further, study can be elaborated to study other behavioral biases on investment decisions.

Evaluation of behavioral biases affecting investment decision making of individual equity investors by fuzzy analytic hierarchy process

2019 ◽  
Vol 12 (3) ◽  
pp. 297-314 ◽  
Author(s):  
Jinesh Jain ◽  
Nidhi Walia ◽  
Sanjay Gupta
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Investment Decision ◽  
Investment Decisions ◽  
Analytic Hierarchy ◽  
Content Type ◽  
Behavioral Biases ◽  
Investment Decision Making ◽  
Overconfidence Bias ◽  
Hierarchy Process

Purpose Research in the area of behavioral finance has demonstrated that investors exhibit irrational behavior while making investment decisions. Investor behavior usually deviates from logic and reason, and consequently, investors exhibit various behavioral biases which impact their investment decisions. The purpose of this paper is to rank the behavioral biases influencing the investment decision making of individual equity investors from the state of Punjab, India. This research would provide valuable insight into the different behavioral biases to investors and other participants of the capital market and help them in improving investment decisions. Design/methodology/approach The research is conducted on the individual equity investors of Punjab, India. Fuzzy analytic hierarchy process was applied to rank the factors influencing the decision making of individual equity investors of Punjab. The primary factors considered for the study are overconfidence bias, representative bias, anchoring bias, availability bias, regret aversion bias, loss aversion bias, mental accounting bias and herding bias. Findings The three most influential criteria were herding bias, loss aversion bias and overconfidence bias. The five most influential sub-criteria were “I readily sell shares that have increased in value (C61),” “News about the company (Newspapers, TV and magazines) affects my investment decision (C84),” “I invest each element of my investment portfolio separately (C71)” and “I usually hold loosing stock for long time, expecting trend reversal (C52).” Research limitations/implications Although sample survey conducted in the present study was based on a limited sample selected from a particular area that truly represented the total population, it is considered as the limitation of this study. Practical implications The outcome of this research provides investors with a better understanding of behavioral biases that influence their decision making. This study provides them a guideline on different behavioral biases that they should consider while making investment decisions. Originality/value The research model is based on the available literature on behavioral finance and the research results and findings would add value to the existing knowledge base.

The influence of big data analytics management capabilities on supply chain preparedness, alertness and agility

2019 ◽  
Vol 32 (2) ◽  
pp. 297-318 ◽  
Author(s):  
Santanu Mandal
Keyword(s):  
Decision Making ◽  
Big Data ◽  
Supply Chain ◽  
Data Analytics ◽  
Investment Decision ◽  
Big Data Analytics ◽  
Content Type ◽  
Investment Decision Making ◽  
Management Capabilities ◽  
The Impact

Purpose The importance of big data analytics (BDA) on the development of supply chain (SC) resilience is not clearly understood. To address this, the purpose of this paper is to explore the impact of BDA management capabilities, namely, BDA planning, BDA investment decision making, BDA coordination and BDA control on SC resilience dimensions, namely, SC preparedness, SC alertness and SC agility. Design/methodology/approach The study relied on perceptual measures to test the proposed associations. Using extant measures, the scales for all the constructs were contextualized based on expert feedback. Using online survey, 249 complete responses were collected and were analyzed using partial least squares in SmartPLS 2.0.M3. The study targeted professionals with sufficient experience in analytics in different industry sectors for survey participation. Findings Results indicate BDA planning, BDA coordination and BDA control are critical enablers of SC preparedness, SC alertness and SC agility. BDA investment decision making did not have any prominent influence on any of the SC resilience dimensions. Originality/value The study is important as it addresses the contribution of BDA capabilities on the development of SC resilience, an important gap in the extant literature.

scholarly journals How do emotional intelligence and behavioral biases of investors determine their investment decisions?

2020 ◽  
Vol 14 (1) ◽  
pp. 35-47
Author(s):  
Saloni Raheja ◽  
Babli Dhiman
Keyword(s):  
Decision Making ◽  
Stock Exchange ◽  
Investment Decision ◽  
Sample Selection ◽  
Investment Decisions ◽  
Risk Tolerance ◽  
Content Type ◽  
Behavioral Biases ◽  
Investment Decision Making ◽  
The Impact

Purpose In earlier studies, research has shown that EI is the only element, which influences the ways in which people develop in their lives, jobs and social skills control their emotions and get along with other people. It is EI that dictates the way people deal with one another and understand emotions. The research gap is to explore the impact of behavioral factors and investors psychology on their investment decision-making. Design/methodology/approach The information was gathered from 500 financial specialists. The region of research was the financial specialists who contribute through LSC Securities Ltd. in Punjab State. The purposive testing system was used in this examination. Findings The investigation found that the positive connection between the conduct predispositions of the financial specialists and venture choices of the speculators and positive connection between enthusiastic insight of the financial specialists and their venture choices. Yet, the authors found that the enthusiastic insight better foresees the venture choices of the financial specialists than the conduct predispositions of the speculators. Among the different elements of conduct inclinations of the speculator’s lament and carelessness are identified with the financial specialist’s venture choices. Among the various estimations of eager understanding – care, dealing with emotions, motivation, empathy and social aptitudes are related to the hypothesis decisions of the monetary pros. Research limitations/implications The sample selection was based on purposive sampling, rather than a random probability sample. The sample was area specific, restricted only to Ludhiana Stock Exchange in Punjab state. Therefore, the results of the study cannot be generalized with certainty to all the investors investing through other exchanges in other states. The inferences are based on the assumption that the data provided by the investors are true and correct. The findings may be relevant for other stock exchanges as that of the Ludhiana Stock Exchange. However, the authors do not claim the generalization of the results. Practical implications This study also helps to understand the relationship between investment decision-making and risk tolerance of investors. It will helpful for the financial advisors to know the behavioral biases of investors while making an investment decision, and therefore, they can advise investors properly to mitigate such biases. It may help the investors in understanding the subjective part of their behavior and control their emotions while taking decisions for their investment in stock market options. Social implications This research will help investment advisors and finance professionals to judge investors’ attitudes toward risk in a better way, which leads to better investment decisions. Originality/value This study is my own study and it is original and has not been published anywhere.

Sign in / Sign up

Export Citation Format

Share Document