Share Investors’ Biases and Investment decision; A study with special Reference to Nilambur in Kerala

Finance

International Conference on Research avenues in Social Science

Behavioural Finance is a new area which attempts to explain the anomalous behaviour of security prices by the psychological biases of investors. It is an approach that studies how psychological factors influence decision making under uncertainty. Behavioural finance stalwarts Amos Tversky and Daniel Kahneman developed new psychological theory of behavioural finance called prospects theory, in which they discussed several states of mind which may influence investor decision making process. This paper is descriptive in nature to analyse the role of share investors’ biases in investment decision with special reference to Nilambur in Kerala, where the primary data were collected from 78 investors by using non random judgement sampling method. Percentages and tables are used to present and analyse the data. The results of the study reveal that investors’ biases such as over confidence, regret aversion etc. have a great impact in investment decision making. Majority of them are considering past performance, trading volume of stock etc. for investing and most of them prefer high risky investments. Behavioural Factors play a vital role in decision making process.

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