Behavioural Finance and Investment Decisions: Does Behavioral Bias

Abstract

Abstract This paper examines the nexus between behavioural bias and investment decisions in a developing country context. Specifically, this study tests the effect of four behavioural biases (overconfidence, regret, belief, and ―snakebite‖) on investment decisions. Descriptive statistics and inferential statistics including multiple regression are used to examine the behavioural biases-investment decisions nexus. The study reveals that the four bias have a significant positive and robust relationship with investment decision making. The result also shows that the "snakebite" effect contributes more to the decision-making, followed by belief bias and then regret bias. Overconfidence bias, however, contributes the least impact on investment decisions. Our contribution confirms the prospect theory and that behavioural bias influences investment decisions in the developing country perspective. Keywords: behavioural Finance, behavioural bias, investment decisions, finance, developing countries