Investor behavior is increasingly recognized as a critical factor influencing financial decision-making, particularly among retail investors. This study investigates the impact of key behavioral biases—overconfidence, herding, anchoring, disposition effect, and loss aversion on investment decisions among retail investors in Bengaluru, Karnataka. A quantitative, survey-based approach was employed, collecting responses from 192 active retail investors using a structured questionnaire. Statistical techniques including descriptive analysis, correlation, regression, and One-Way ANOVA were used to analyze the data. The findings reveal that all five behavioral biases have a statistically significant positive correlation with investment decisions, with loss aversion exhibiting the strongest influence. Additionally, the study explores the interaction between these biases, indicating that they often co-occur and reinforce each other in real-world investment scenarios. The results suggest that cognitive and emotional biases substantially affect investor behavior, often overriding rational financial analysis. These insights underscore the need for enhanced investor awareness and targeted behavioral training programs, particularly for younger and less experienced investors. The study contributes to the growing body of behavioral finance literature in emerging markets and offers practical implications for financial advisors, regulators, and policymakers.
Sachin Gupta (Wed,) studied this question.