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    Research Proposal

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    RAHUL KUMAR
    This research proposal aims to study the applicability of behavioral biases in individual investors' decision-making. It will apply behavioral finance concepts to identify common behavioral biases like cognitive dissonance, herd instinct, hindsight bias, and confirmation bias that influence investment decisions. The study will collect primary data through surveys to analyze the impact of these biases and develop a regression model relating behavioral biases as independent variables to investment decisions as dependent variables. The goal is to understand how biases influence performance to help investors make better informed choices.

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    Research Proposal

    Uploaded by

    RAHUL KUMAR
    280 views11 pages
    This research proposal aims to study the applicability of behavioral biases in individual investors' decision-making. It will apply behavioral finance concepts to identify common behavioral biases like cognitive dissonance, herd instinct, hindsight bias, and confirmation bias that influence investment decisions. The study will collect primary data through surveys to analyze the impact of these biases and develop a regression model relating behavioral biases as independent variables to investment decisions as dependent variables. The goal is to understand how biases influence performance to help investors make better informed choices.

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    This research proposal aims to study the applicability of behavioral biases in individual investors' decision-making. It will apply behavioral finance concepts to identify common behavioral biases like cognitive dissonance, herd instinct, hindsight bias, and confirmation bias that influence investment decisions. The study will collect primary data through surveys to analyze the impact of these biases and develop a regression model relating behavioral biases as independent variables to investment decisions as dependent variables. The goal is to understand how biases influence performance to help investors make better informed choices.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    280 views11 pages

    Research Proposal

    Uploaded by

    RAHUL KUMAR
    This research proposal aims to study the applicability of behavioral biases in individual investors' decision-making. It will apply behavioral finance concepts to identify common behavioral biases like cognitive dissonance, herd instinct, hindsight bias, and confirmation bias that influence investment decisions. The study will collect primary data through surveys to analyze the impact of these biases and develop a regression model relating behavioral biases as independent variables to investment decisions as dependent variables. The goal is to understand how biases influence performance to help investors make better informed choices.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
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    The key takeaways are that behavioral finance studies how psychology influences investor behavior and decisions. It recognizes that investors are not perfectly rational and can be influenced by their own cognitive biases.

    Behavioral finance treats investors as normal rather than perfectly rational. It recognizes limits to self-control and how investors can be influenced by biases. Traditional finance assumes investors are perfectly rational, have perfect self-control, and are not influenced by cognitive errors.

    The document discusses cognitive dissonance, herd instinct, hindsight bias, and confirmation bias.

    RESEARCH PROPOSAL

    ON

    A STUDY ON APPLICABILITY OF BEHAVIORAL


    BIASES IN INDIVIDUAL INVESTORS DECISION-
    MAKING.
    BEHAVIORAL FINANCE

    • DEFINITION :- Behavioral finance is the study of the influence of


    psychology on the behavior of investors. It focuses on the fact that
    investors are not always rational, have limits to their self-control, and
    are influenced by their own biases.
    COMPARISION

    BEHAVIORAL FINANCE TRADITIONAL FINANCE


    • Investors are treated as • Investors are treated as
    “Normal” not “Rational”. perfectly “Rational”.
    • They actually have limits to • Investors have perfect self-
    their self-control. control.
    • Investors are influenced by • They are not confused by
    their own biases. cognitive errors or
    • Investors make cognitive information processing
    errors that can lead to errors.
    wrong decision.
    BEHAVIORAL BIASES

    • COGNITIVE DISSONANCE :- Cognitive dissonance is the


    unpleasant psychological bias that results from believing two
    contradictory things at the same time . Cognitive dissonance can lead
    to irrational decision making .

    • HERD INSTINCT :- Heard instinct is a mentality that influence


    the investors to follow what they perceive other investors are doing
    rather than their own analysis.
    • HINDSIGHT BIAS :- Hindsight bias is a term used in psychology
    to explain the tendency of people to overestimate their ability to
    have predicted an outcome that could not possibly have been
    predicted.

    • CONFIRMATION BIAS :- Confirmation bias is a term from the


    field of cognitive psychology that describes how investor naturally
    favor information that confirms their previously existing beliefs.
    OBJECTIVES OF THE STUDY

     Applying the behavioral finance to identify the possible


    behavioral biases influencing the investment decisions of
    individual investors.

     Identify the impact level of behavioral biases on the investment


    decision and performance of individual investors.
    PROBLEM STATEMENT

    To understand and give some suitable explanation for the investors


    decision-making , it is important to explore which behavioral bias
    influence the decision of investors, and how these bias influence
    their investment performance.

    It will be useful for investors to understand common behavior ,


    from which justify their reactions for better return.
    RESEARCH MODEL

    INDEPENDENT VARIABLE DEPENDENT VARIABLE

    BEHAVIORAL BIAS INVESTMENT DECISION


    HYPOTHESES

    • On the basis of the existing studies the researchable


    hypotheses are presented as under :-

    • H0 : There is no significant impact of behavioral bias


    on individual investor decision-making.

    • Ha : There is significant impact of behavioral bias


    on individual investor decision-making.
    RESEARCH METHODOLOGY

    • Deductive method will employ in the study.


    • The study would be based on the primary data.
    • In order to collect data, structured questionnaire will be used to
    enable respondents to express their behavioral bias .
    • A sample size of 500 individual investors will be taken.
    • Correlation analysis will be used to assess the types
    (positive/negative) of relationship that exist between two variables.
    • Further a regression function will be developed by assuming
    behavioral bias as the independent variable and investment
    decision as the dependent variable.
    PROPOSED CHAPTER OF THE STUDY

    • CHAPTER 1. Introduction and Conceptual Framework


    • CHAPTER 2. Review of Literature
    • CHAPTER 3. Research Methodology
    • CHAPTER 4. Analysis and Interpretation
    • CHAPTER 5. Suggestion and Conclusion
    • References

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