Establishing AN Association between Risk Tolerance and Behavioral Biases among Indian Investors.
Naela Jamal Rushdi1, Sushma2
1Dr. Naela Jamal Rushdi, Director and Professor LM Academy of Higher Learning, Research Scholar AKTU Lucknow, (Uttar Pradesh), India.
2Sushma, Director and Professor LM Academy of Higher Learning, Research Scholar AKTU, Lucknow, (Uttar Pradesh), India.
Manuscript received on November 22, 2019. | Revised Manuscript received on December 15, 2019. | Manuscript published on December 30, 2019. | PP: 1378-1382 | Volume-9 Issue-2, December, 2019. | Retrieval Number: B2637129219/2020©BEIESP | DOI: 10.35940/ijeat.B2637.129219
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: Behavioral Finance Literature Has Shown A Mushroom Growth In The Recent Years. Literature Shed Specific Light On How The Concept Evolved And Later Developed To Various Stages Which Helped To Understand Various Market Anomalies And The Psychology Of Individuals Through Behavioral Biases. Behavioral Finance Tries To Explain The Logic Behind Applying Of Heuristics Or Shortcuts By Investors To Take Investment Decisions Which Still Need To Be Extensively Studied. The Study Here Attempts For Identify Presence Of Different Biases In Individual Decision Making And Their Association With The Risk Tolerance Capacity. The Results Indicate That Heuristic Biases (I.E. Representativeness Bias, Overconfidence Bias And Gamblers Fallacy Bias) Are Linked To Moderate To High Risk Tolerant Investors. While Herd Bias And Prospect Biases (Loss Aversion Bias And Mental Accounting Bias) Are Found To Be Linked With Low To Moderate Risk Tolerance Levels Of Investors. Heuristics Are Positively Correlated With Risk Tolerance However; Prospect And Herd Are Found To Be Negatively Correlated With Risk Tolerance.
Keywords: Behavioral Biases, Herd Bias, Heuristics, Prospect, Risk Tolerance.