Overconfidence bias in the Indian stock market in diverse market situations: an empirical study

Investors’ Happiness and Stock Market

“…From these results, it can be concluded that investors' happiness does not affect the returns of stocks but it can affect the volatility of those returns. On one side, the results regarding volatility are in line with claims of researchers like (Kumar & Prince, 2022), (Naeem et al, 2020), and (Li et al, 2021) in that happiness can affect the volatility of returns in the market. On the other side, the conclusions of this study regarding the effect of happiness on the stocks' returns are apposite to what was concluded by other researchers including (Zhao, 2019) and (Saurabh & Dey, 2020) who concluded that happiness affects the returns of stocks in the market.…”

“…Like other people in the community, investors in the financial markets have emotions and feelings which can affect their behavior in making investment decisions (Sattar et al, 2020). These feelings include positive emotions like happiness (Kumar & Prince, 2022) and hope (Aren & Hamamci, 2020) and negative emotions like sadness (Kumar & Prince, 2022), and anger and fear (Aren & Hamamci, 2020). It can be understood from the definition of emotions that it can change the psychological state of the investors which may push them to take some investment decisions different than those taken in normal situations.…”

“…Happiness is the most desirable feeling for people because it includes emotions of joy and satisfaction (Cherry, 2022). The positive emotion of happiness can affect the stock markets as stated by Kumar and Prince (2022); this effect may be generated by decreasing the level of stress and fear for investors which provides a pleasant environment for investment decision making and enhance the process of selecting, buying, and selling of stocks in the market. Consequently, the stock market will be better if all investors are taking the correct investment decisions considering all available information without any pressures from negative feelings like sadness and fear.…”

Specifying and validating overconfidence bias among retail investors: a formative index

“…(Pompian, 2006, p. 51). Overconfidence among investors means erroneously believing that they are well-versed in the market, regardless of the risk (Jain et al, 2020;Kumar and Prince, 2022;S ¸enol and Onay, 2023). Investors were found to be accurate in their forecasts (Islam Khan et al, 2016;Du and Budescu, 2018).…”