How Heuristics Shape Investment Decisions: Survey Evidence from Indian Retail Investors
DOI:
https://doi.org/10.58574/jaa.2025.v4.i2.09Keywords:
Behavioural Finance, Heuristic Biases, India, Investment Decisions, Retail InvestorsAbstract
This study examines the influence of heuristic biases (HB) like representativeness bias (RB), availability bias (AB) and anchoring and adjustment bias (A&AB) on investment decisions (ID) among Indian retail investors. Drawing upon behavioural finance theory, the research employs ‘Partial Least Squares Structural Equation Modelling (PLS-SEM)’ with data from 367 active young investors aged 18–44. Results reveal that all three heuristics significantly and positively influence investment decisions. Multi-group analysis (MGA) results indicate no significant moderating impact of age (Millennials vs. Gen Z) or gender (Male vs. Female) on these relationships.
The outcomes illustrate the persistence of cognitive shortcuts regarding financial decisions irrespective of demographic differences. By providing integrated empirical evidence on several heuristic effects in the context of retail investments in India, this work extends to the pool of knowledge on behavioural finance (BF).
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