Abstract:
Behavioral biases haven't gotten the attention they merit, especially in the Indian context.
Despite the abundance of information on behavioural finance, only a few academic
research has sought to examine behavioural biases across different demographic groups.
This research tries to address this lacuna in the literature. The present research work
aims to investigate and quantify the behavioural biases that influence individual investors'
investment decisions. The primary data was collected through a structured questionnaire
from five prominent cities in the most populated state of India, i.e., Uttar Pradesh. The
data was collected from 487 individual investors with the help of their financial advisors
and brokers. The empirical research work revealed that eight listed biases affect
investment decisions by nearly 82%. The outcome as a formal bias assessment instrument
was supported by exploratory factor analysis (EFA) encompassing eight behavioural
biases measured via 47 statements. The present research contribution, provides a formal
assessment tool and further helps the researchers to uncover behavioral biases and
develop de-biasing strategies. Academicians, financial advisers, practitioners, and
economic psychologists are invited to utilize the instrument in order to further confirm its
efficacy.
