A Comparative Analysis of Occupational Influences on Investors' Decisions: Exploring the Effects of Heuristics and Behavioral Biases

Abstract

Behavioral biases have emerged as significant determinants of investors' financial market decisions. These cognitive and emotional biases can often lead to suboptimal investment choices and hinder investors' abilities to achieve their financial goals. This study examines and evaluates the effects of heuristics and biases on investors' decisions while conducting a comparative analysis among investors from self-owned, private, and government organizations. Data for this purpose was collected from Indian investors in Delhi/NCR by a convenience sample approach, and questionnaires were given to 500 investors. Two statistical tools, regression and analysis of variance (ANOVA), were used to evaluate the gathered information. The outcomes indicate that availability, anchoring, recency, and herding biases significantly impact investment decisions, but representativeness did not significantly affect investors’ decisions. At the same time, no significant difference exists in occupation concerning investment decisions. This study aims to enhance awareness of heuristics and biases in handling investments, providing valuable insights to those making decisions and working in financial firms. Individuals could enhance their abilities by acknowledging their biases and judgment mistakes because they are familiar, can occur to anyone, and will increase market efficiency.