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Mental Accounting, Framing and Loss Aversion Impact on Investment Decisions of Individual Investors in the Colombo Stock Exchange

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Investigation reveals how loss aversion and framing impact investment choices in CSE investors, highlighting behavioral finance insights.

Loss aversion greatly impacts investment choices, leading to conservative strategies and reluctance to sell at a loss.
Investors employing mental accounting allocate money based on imagined goals, resulting in suboptimal diversification.
Framing bias influences decisions based on how information is presented to individual investors.
Overall, understanding these biases can enhance financial decision-making and improve market efficiency.

Shalika et al. (2025) studied this question.

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