Behavioral Finance and Impact on Investor Decision Making

This study investigates the intersection of psychology and finance by analysing how cognitive biases—specifically overconfidence, herding, anchoring, and loss aversion—influence individual investment decisions. Utilizing a quantitative approach, primary data were gathered from a convenience sample of investors via structured questionnaires. Hypotheses were tested using a robust suite of inferential statistical techniques, including multiple regression, Pearson correlation, Chi-square tests, and ANOVA. The empirical results reveal a nuanced relationship between demographics and decision-making: while gender exerted a statistically significant influence on the investment process, age, occupation, and educational attainment did not. Furthermore, the findings indicate that behavioural biases and investor awareness levels are statistically insignificant predictors of investment choices within this sample. However, a significant positive correlation was identified between investor psychology and the manifestation of behavioural biases, suggesting that internal psychological frameworks are more critical drivers of bias than external demographic profiles or general awareness. Correlation analysis further demonstrated a negative relationship between gender and occupation, contrasted by a positive correlation between age and education. These findings challenge traditional assumptions regarding the impact of bias on rational decision-making, highlighting the complexity of psychological triggers in financial environments.