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Th is study offers empirical insights into investor behavior and its correlation with various behavioral biases in the context of investment decisions in the Pakistan Stock Exchange (PSX). Data was collected through a structured questionnaire from 261 individual investors in Pakistan. The study employs hierarchical regression analysis to test the hypothesis. It considers several behavioral biases, and statistically, anchoring and adjustment, overconfidence, and herding show a significant impact. The study uses financial literacy to examine its moderating effects on these biases, and the result suggests that it significantly influences behavioral biases related to investment decisions. The results underscore the unique investment behaviors in emerging markets, contrasting with established norms in well-developed financial markets. These findings can inform policymakers and stock market authorities about investor decision-making in emerging economies.
Mahmood et al. (Sat,) studied this question.