INVESTMENT DECISIONS AND BEHAVIORAL BIASES: A STUDY OF INVESTORS IN TAMIL NADU
Keywords:
Behavioral Biases, Investment Decision-Making, Cognitive Bias, Emotional Bias, Financial Literacy, Risk Management, Equity Investors.Abstract
This study examines the impact of behavioral biases on investment decisions among equity investors in Tamil Nadu, focusing on cognitive and emotional biases that influence financial choices. Using a descriptive research design and a purposive sampling technique, primary data was collected from 418 equity investors through a structured questionnaire. The findings reveal that behavioral biases, particularly emotional biases, significantly shape investor decision-making, often leading to irrational choices driven by overconfidence, herd mentality, loss aversion, and familiarity bias. The study also identifies investment research and risk management as the strongest predictors of effective financial decision-making, while psychological and ethical considerations have a moderate impact. Additionally, the results highlight a gender gap in investment participation, suggesting the need for targeted financial literacy initiatives. Addressing behavioral biases through financial education and strategic planning can help investors make more rational and informed decisions, optimizing their financial outcomes.
