Comforting Investments are Rarely Profitable: Impediments in Investor Decision Making

Bashir, Taqadus; Mehmood, Faisal; Khan, Altamash

doi:10.31703/gssr.2019(iv-ii).07

Cited by 5 publications

(5 citation statements)

References 9 publications

(11 reference statements)

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“…This suggests that investors' feelings and beliefs influence their investment decision- making (Dhaoui and Khraief, 2014). Bashir et al , (2019) reported an insignificant relationship between optimism and investor decision-making.…”

Section: Literature Reviewmentioning

confidence: 99%

Behavioural errors and stock market investment decisions: recent evidence from Pakistan

Rashid

Tariq

Rehman

2021

AJAR

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PurposeThis study examines the role of behavioural factors, such as confidence, optimism, pessimism and rational expectation, in affecting investment decisions in the Pakistani stock market.Design/methodology/approachUsing daily trading data of KSE-100 index from January 2012 to December 2015, different regression models, including descriptive statistics and stationarity tests, are performed.FindingsResults indicate that stock market trading has suffered from pessimistic behaviour of investors. In the first model, the authors find a positive sign of confidence and negative sign of optimism with the trading volume. The second model shows a positive role of confidence and rational expectations in affecting the trading volume in daily, Monday and Friday samples. The results of the third model show a negative sign of both optimism and rational expectation with the trading volume. Furthermore, the next model shows a negative sign of confidence combined with pessimism while testing their relationship with the trading volume. Finally, results of the final model suggest that optimism negatively affects the trading volume, and on the other hand, pessimism has a positive impact on the trading volume.Research limitations/implicationsThe method and empirical testing of behavioural biases and their relationship with economic variable used in this study seem to be a promising way to better understand the role of psychology in deriving financial decisions for academics and policymakers.Originality/valueThis study uses secondary data for measuring behavioural biases and decomposes the effect between rational expectation and behavioural biases.

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Section: Literature Reviewmentioning

confidence: 99%

Behavioural errors and stock market investment decisions: recent evidence from Pakistan

Rashid

Tariq

Rehman

2021

AJAR

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“…Amidu et al (2008) characterized anchoring as a form of bias caused by an appraiser's adjustments of an initial anchor, and such adjustments are often insufficient to compensate for the effects of the initial reference point, thereby reducing the accuracy of judgment. According to Bashir et al (2019), decision-makers often neglect the possibility of making misjudgments and are easily influenced by multiple biased and erroneous factors. Iroham et al (2013) demonstrated that utilizing anchoring would result in the inconsistency and inaccuracy of estimations.…”

Section: Questionnaire Designmentioning

confidence: 99%

“…Therefore, in addition to increasing appraisers' self-discipline, appraiser associations should establish higher standards for ethical norms and implement clear and quick supervisory measures. Finally, concerning the psychological and cognitive aspects, Bashir et al (2019) highlighted that behavioral biases are associated with feelings, perceptions, affection, intelligence, and personality. Pompian (2012) classified behavioral biases into cognitive errors and emotional biases and noted that the former can be corrected more easily than the latter.…”

Section: Practical Implicationsmentioning

confidence: 99%

The Impacts of Task Complexity, Overconfidence, Confirmation Bias, Customer Influence, and Anchoring on Variations in Real Estate Valuations

Lee

Yeh

et al. 2022

International Journal of Strategic Property Management

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Real estate valuation relies on real estate appraisers’ accurate assessments, which reflects the need to improve the objectivity of the valuation process. From the perspective of behavioral economics, appraisers are prone to numerous behavioral conflicts that could result in variations in their valuations. This study investigates the impacts of task complexity, overconfidence, confirmation bias, client influence, and anchoring on variations in real estate valuations. An online questionnaire was administered to 272 members of the Taiwan Real Estate Appraisers Association LINE group. Structural equation modeling was employed for analysis. A total of 150 valid responses were collected, yielding a valid response rate of 55.15%. The empirical results revealed that cognitive bias and client influence have significant and positive impacts on anchoring. Task complexity, overconfidence, and customer influence have significant and positive impacts on valuation variation. In addition to being the first study to explore the relationship between task complexity and valuation variation, this study also explored unconventional issues, such as the relationships between overconfidence, confirmation bias, and valuation variation. The results highlight the salience and value of behavioral economics-based analyses in empirical research on real estate valuation.

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“…Hasil penelitian menunjukkan optimism bias tidak signifikan terhadap keputusan investasi investor saham di kota Palembang dan hal ini mendukung penelitian Bashir et al (2019) serta Riaz & Iqbal (2015). Investor mempertimbangkan pengambilan keputusan dengan informasi yang diperolehnya dengan hati-hati dan menggunakan informasi yang mendukung guna melengkapi informasi yang dianggap bertentangan.…”

Section: Hasil Ujiunclassified

“…Penelitian Pradhana (2018) danBashir et al (2019) menyimpulkan illusion of control bias memiliki hubungan signifikan terhadap keputusan investasi, sehingga diperoleh hipotesis: H5: Illusion of Control bias signifikan terhadap pengambilan keputusan investasi.…”

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Perilaku Investor Dalam Transaksi Saham di Pasar Modal

Azzahra

Andrian

Thamrin

2021

ajeks

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This study aims to analyzing the behavior of Palembang investors through cognitive biases and emotional biases that impacting investor’s decision making on stock transaction in the capital market. This decision making proxied by cognitive biases, there are overconfidence bias, represtentativeness bias, anchoring and adjustment bias, availability bias, illusion of control bias, and conservatism bias, also proxied by emotional biases there are self-control bias, optimism bias, loss aversion bias, dan status quo bias. The population of the study are investors whom became partners of securities, those listed in Indonesian Stock Exchange and the securities which stand only in Palembang region. There are 50 investors as sample of this study with purposive sampling as sampling method. The type data of this study is qualitative and the resources of data in this study is primary data with distributing questionnaire. Analyzing method in this study using multivariate analysis Structural Equation Model (SEM) and the result of this study shows that availability bias, conservatism bias, and loss aversion bias have significance effect to Palembang investor’s decision making in 2020. For future research could be able to take other samples from another big cities, as well as conducted research on the relationship between behavioral biases and financing or behavioral biases and health that including demographics and etc.

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Comforting Investments are Rarely Profitable: Impediments in Investor Decision Making

Cited by 5 publications

References 9 publications

Behavioural errors and stock market investment decisions: recent evidence from Pakistan

Behavioural errors and stock market investment decisions: recent evidence from Pakistan

The Impacts of Task Complexity, Overconfidence, Confirmation Bias, Customer Influence, and Anchoring on Variations in Real Estate Valuations

Perilaku Investor Dalam Transaksi Saham di Pasar Modal

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