Unraveling behavioral biases in decision making: A study of Nepalese investors

Unraveling behavioral biases in decision making: A study of Nepalese investors

Wednesday, 10 January 2024 | Rajesh Gurung, Rewan Kumar Dahal, Binod Ghimire, Nischal Koirala
This study examines the influence of behavioral biases on investment decisions among Nepalese investors, focusing on overconfidence, representativeness, anchoring, regret aversion, and herding biases. Using a linear regression model and a structured questionnaire with 379 observations, the study reveals that overconfidence, anchoring, and regret aversion biases significantly impact investment decisions. Representativeness bias has a minor effect, while herding behavior shows no significant relationship with investment choices. The findings highlight the importance of addressing these biases for well-informed investment decisions, maintaining financial stability, and fostering market development in Nepal's emerging stock market. The study contributes to the understanding of investor behavior and provides valuable insights for scholars and practitioners.This study examines the influence of behavioral biases on investment decisions among Nepalese investors, focusing on overconfidence, representativeness, anchoring, regret aversion, and herding biases. Using a linear regression model and a structured questionnaire with 379 observations, the study reveals that overconfidence, anchoring, and regret aversion biases significantly impact investment decisions. Representativeness bias has a minor effect, while herding behavior shows no significant relationship with investment choices. The findings highlight the importance of addressing these biases for well-informed investment decisions, maintaining financial stability, and fostering market development in Nepal's emerging stock market. The study contributes to the understanding of investor behavior and provides valuable insights for scholars and practitioners.
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