Abstract:
The term finance has been used from several years, while behavioural finance is quite new
field in modern financial studies which takes under thought psychology of human being.
Theories comes under behaviour finance are based on the psychology, which tries to develop
understanding how behaviour of individual investors is being influenced by their emotions
and cognitive biases. The present study examines how personality traits are influencing on
investors’ over confidence bias. For the study purpose 330 samples are drawn from Colombo
stock exchange investors. Analysed results show that there is negative relationship between
individual personality traits (extroversion, consciousness, neuroticism, openness) and
overconfidence bias. Agreeableness personality has negative relationship with
overconfidence bias but the relationship is not statistically significant. This study suggested
to the investors who should be aware of psychological biases with which they can face by
knowing their own personality traits and also make decisions depending on their financial
risk. Further researchers recommend educated individuals evaluate the investment's programs
consciously and consult with others about their own ideas.
