Behavioural Biases and Trading Volume: Empirical Evidence from the Indian Stock Market

Do heuristics affect Brazilian investors’ decision-making process?

“…The analysis revealed that the decision to buy or sell financial assets by other investors would either positively or negatively impact the decisions of the respondents. Furthermore, other studies have not found evidence to support the existence of a significant influence of herd behavior on investor behavior (Kanojia et al, 2018;Alquraan et al, 2016). We believe that one of the reasons behind not detecting a significant influence from herd behavior may be related to the nonsegmentation of the sample for the analysis of the constructs' effects on investors' decision-making processes.…”

“…In the financial market, this behavior is observable when investors analyze the price of a stock in the past. Based on where a devaluation or appreciation occurred, if an investor starts to believe in an economic upturn in the future, through a probability between values and events that affect the investor, then they is making an irrational decision based only on their uncertain judgment without analyzing the fundamentals of the chosen company (Kanojia et al, 2018). According to Peters (2003), even if a possibility exists of a certain event, this does not mean that it will repeat in the future, causing the investor to be strongly influenced by irrational information.…”

“…Overconfidence in their information and actions leads investors to be willing to perform excessive buying and selling, taking risks beyond rational calculations (Abdin et al, 2017). Kanojia et al (2018) examines the behavior of investors in the Indian stock market and finds that overconfidence is the heuristic that affects investors the most. Furthermore, Alquraan et al (2016) also find results that validate the influence of overconfidence on investors' decision-making in the Saudi Arabian stock market.…”

Unravelling Behavioural Biases in Individual and Institutional Investors Investment Decision- making: Intersection of Bibliometric and Systematic Literature Review

“…Bhatt and Chauhan (2014) conducted a study examining the diverse behavioural factors that influence investors’ financial decisions in the stock market. These factors encompass overconfidence, representativeness, framing, regret aversion (Singh & Nag, 2016), gamblers’ fallacy, hindsight (Hussain et al, 2013; Subash 2012;), availability bias (Nofsinger & Varma, 2013), conservatism, herding, anchoring, cognitive dissonance (Kanojia et al, 2018) and mental accounting (Shefrin & Thaler, 1988). Investors are prone to cognitive and psychological errors, which can lead to irrational decision-making.…”

“…Mental pressure is caused due to contradictory ideas and values, which results in cognitive dissonance (Festinger, 1957). According to empirical evidence presented by Chandra (2008) and Kanojia et al (2018), it is evident that the cognitive dissonance bias is prevalent among Indian investors. This cognitive dissonance bias has been found to increase the likelihood of being influenced by confirmation bias and overconfidence bias, leading to irrational behaviour (Olsen, 2008).…”