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Investor Biases in Financial Decisions

Investor Biases in Financial Decisions

Shalini Kalra Sahi
Copyright: © 2015 |Pages: 23
ISBN13: 9781466674844|ISBN10: 1466674849|EISBN13: 9781466674851
DOI: 10.4018/978-1-4666-7484-4.ch009
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MLA

Sahi, Shalini Kalra. "Investor Biases in Financial Decisions." Handbook of Research on Behavioral Finance and Investment Strategies: Decision Making in the Financial Industry, edited by Zeynep Copur, IGI Global, 2015, pp. 147-169. https://doi.org/10.4018/978-1-4666-7484-4.ch009

APA

Sahi, S. K. (2015). Investor Biases in Financial Decisions. In Z. Copur (Ed.), Handbook of Research on Behavioral Finance and Investment Strategies: Decision Making in the Financial Industry (pp. 147-169). IGI Global. https://doi.org/10.4018/978-1-4666-7484-4.ch009

Chicago

Sahi, Shalini Kalra. "Investor Biases in Financial Decisions." In Handbook of Research on Behavioral Finance and Investment Strategies: Decision Making in the Financial Industry, edited by Zeynep Copur, 147-169. Hershey, PA: IGI Global, 2015. https://doi.org/10.4018/978-1-4666-7484-4.ch009

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Abstract

Financial Decisions involve making choices between various investment alternatives, with the aim of increasing the individual's net worth. The investor today is exposed to various investment options, but does not have the knowledge and capability of evaluating all the options and making a rational decision. Due to the limitation in the information processing capacities of the individuals, their beliefs and preferences, the investment decision-making process, gets biased. This chapter highlights ten such biases and throws light on how they impact investment behaviour, both positively and negatively. This understanding of investor psychology will generate insights that will benefit the financial advisory relationship. Further for Individuals, recognizing how the biases impact their financial decisions, can help create self-awareness and an understanding that would help them in better financial management, in case these tendencies are leading them to make unsatisfactory investments.

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