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Investment Behavior of Secondary Equity Investors : An Examination of the Relationship Among the Biases

By: Contributor(s): Material type: TextTextDescription: 7-20 pSubject(s): In: GILANI,S. INDIAN JOURNAL OF FINANCESummary: Behavioral finance attempts to explain the emotions in the stock market which lead to anomalous stock market behavior. Behavioral biases exhibited by the investors explain their irrational decision making. Knowledge about the interaction among the biases would help to comprehend the investors' financial personality better. Using a dataset of 436 secondary equity investors residing in Chennai, this study measured eight behavioral biases on a Likert scale through a questionnaire survey. The biases studied included mental accounting, anchoring, gambler's fallacy, availability, loss aversion, regret aversion, representativeness, and overconfidence. Significant relationships among the behavioral biases were documented in the study. The biases: (a) overconfidence, regret aversion, and anchoring biases; (b) loss aversion and anchoring; (c) representativeness, gambler's fallacy, and mental accounting; (d) mental accounting and availability biases exhibited by the secondary equity investors were found to be interrelated. Hence, the financial advisors could improve their advice and recommend guidelines to the investors based on the biases they are likely to exhibit.
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Holdings
Item type Current library Call number Vol info Status Notes Date due Barcode Item holds
Journal Article Journal Article Main Library Vol 12, Issue 9/ 5559447JA1 (Browse shelf(Opens below)) Available 5559447JA1
Journals and Periodicals Journals and Periodicals Main Library On Display JRNL/FIN/Vol 12, Issue 9/5559447 (Browse shelf(Opens below)) Vol 12, Issue 9 (01/09/2018) Not for loan September, 2018 5559447
Total holds: 0

Behavioral finance attempts to explain the emotions in the stock market which lead to anomalous stock market behavior. Behavioral biases exhibited by the investors explain their irrational decision making. Knowledge about the interaction among the biases would help to comprehend the investors' financial personality better. Using a dataset of 436 secondary equity investors residing in Chennai, this study measured eight behavioral biases on a Likert scale through a questionnaire survey. The biases studied included mental accounting, anchoring, gambler's fallacy, availability, loss aversion, regret aversion, representativeness, and overconfidence. Significant relationships among the behavioral biases were documented in the study. The biases: (a) overconfidence, regret aversion, and anchoring biases; (b) loss aversion and anchoring; (c) representativeness, gambler's fallacy, and mental accounting; (d) mental accounting and availability biases exhibited by the secondary equity investors were found to be interrelated. Hence, the financial advisors could improve their advice and recommend guidelines to the investors based on the biases they are likely to exhibit.

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