Impact of Automation Bias and Status Quo Bias on Capital Market Investment Decisions of Indian Investors: An Explanatory Research

The present study explores the presence and impact of automation bias and status quo bias on the capital market investment decisions of Indian retail investors. In behavioral economics the term automation bias is known as the excessive dependency of investors on automated or computer generated information for stock selection decisions. On the other hand, status quo bias is the inherent tendency of an investor to keep his portfolio unaltered irrespective of the changing dynamics of capital market for a variety of reasons. In this study an attempt has been made to figure out the extent of presence and degree of impact of both the biases in the investment decisions of investors. The study is based on data collected through a five point Likert scale questionnaire framed to figure out answers to the research questions. The questionnaire was distributed among 496 retail investors of National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The outcome of this study clearly point out that there is a definite presence of automation bias and status quo bias in investment decisions of the capital market investors of India and there is a considerable and statistically significant (p<0.05) magnitude of impact of both the biases on the investment decisions of Indian investors. The research also concludes that certain steps must be taken by investors to keep away from behavioral biases in investment decisions and shield their portfolio from unwarranted and potentially damaging behavioral mistakes or pitfalls. The researchers have a strong belief that this research is a maiden attempt to study automation bias and status quo bias among retail investors and will bring about some significant revelations in the study of behavioral economics particularly in the analysis of behavioral biases from the standpoint of capital market investors.