Abstract:
This study's main objective is to investigate the role of heuristic behaviour on the
investment performance of individual investors at Colombo Stock Exchange (CSE).
Investment needs for effective use of accumulated money and, in return receiving the
optimal return. Therefore, the stock market plays a backbone to the economy’s
development by extending the country's investments, especially for Sri Lanka as a
developing country. This study begins with the heuristic theory in behavioural
finance, based on which a hypothesis is proposed. Then, these hypotheses are tested
through the questionnaires distributed to individual investors. The sample size is 100
individual investors, those respondents were selected under the Proportionate
stratified random sampling method. The collected data are analyzed by using SPSS.
Statistical techniques include Correlation Analysis and Regression Analysis. The
result shows that, overall Heuristic factors have a positive significant influence on
investment performance. In addition to this, while individual factors wise analysis,
Representativeness and Anchoring variables have significant influence, whereas
other factors namely Availability bias, Gambler’s fallacy and Overconfidence, which
do not have a significant influence on investment performance.
