Influence Of Heuristic Factors On Investment Decision Making: An Empirical Study Based On Retail Equity Investors In India

Abstract

Despite its strong global presence as a potential economic power, the investment in Indian equity market is still having a slow growth. One of the main reasons for this slow growth is the lack of understanding of the impact of various behavioral biases of investors on their investment decision making process. The present paper aims to explore the influence of one of such behavioral factors, i.e., heuristic factors, on individual investors’ decisions in the Indian equity market. The perception of 550 investors from Bangalore were collected through a structured questionnaire. The finding revealed that heuristic factors significantly affected the investment decisions of individual investors in the Indian equity market. Representativeness and overconfidence exerted the highest influence, whereas availability bias had zero influence.