A EXPLORATORY RESEARCH ON INFLUENCES OF INDIVIDUAL BEHAVIORAL FACTORS IN THE CONTEXT OF INDIVIDUAL INVESTOR DECISION MAKING PROCESS TOWARD EQUITY SECURITIES

Abstract

The present research studies tries to attempt and explore the prominent area of investing which is related to determining the factors which have their impact on individual retail investors choices in equity securities which is based on the established principles since long in behavior finance. This is a field which has gain prominent significance over last past few years rather few decades. This approach has challenged the conventional hypothesis of investor rationality as theorized by EMH-Efficient Market Hypothesis. Seminal works by eminent scholars like Daniel Kahneman, Richard Thaaler and Amos Tversky have very well demonstrated that the major factors that influence the financial decision making are perceptive biases and emotional reactions. The purpose of this research study is to encompass the pre-established body of knowledge by identification, examination and analysis of certain emotional and cognitive biases like perception, risk factor, loss aversion, overconfidence, herd behavior that impact individuals while taking the decisions of investing specifically in equity markets. The research has used both quantitative survey method and qualitative interviews for examining the impact on decision making. The demographic factors and psychological characteristics of the investors and equally seek to discover how the two influence the behaviour of investors. Furthermore, this article aims at providing an outline of the related empirical literature and considering the behaviour of the investors and the psychological properties which in this attempt tries to establish whether investors behave rationally in their decision-making processes or whether their decisions are influenced by their sentiments or other psychology factors. Descriptive research methodology was adopted in the present research studies. Non-probability sampling technique i.e purposive sampling was used and around 120 responses were collected from retail individual investors in Pune District. The outcome of this research highlighted how the variables defined in behavioral factors have led to deviations from taking rational decisions which often result in suboptimal investment consequences.