The impact of heuristic availability bias on investment<scp>decision‐making</scp>: Moderated mediation model

Salman, Muhammad; Khan, Bakhtiar; Khan, Sher Zaman; Khan, Rafi Ullah

doi:10.1002/bsd2.148

Cited by 14 publications

(8 citation statements)

References 54 publications

(64 reference statements)

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“…Earlier studies (Ahmad and Shah, 2020;Chen et al, 2007;Khan, 2020;Massa and Simonov, 2005;Salman et al, 2021) also suggest that people use simple methods or shortcuts like relying on past trends or previous prices while deciding on the uncertain situation instead of complex algorithms. Thus, it leads to judgmental error and poor decision-making but sometimes produces optimal outcomes that are accurate and acceptable (Harvey, 2007).…”

Section: Resultsmentioning

confidence: 99%

Impact of Heuristic-Driven Biases on Investment Decision-Making of Individual Investors: The Mediating Role of Risk Perception

Yadav¹,

Chaudhary²

2022

OJC

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Investors do not behave rationally as traditional finance suggests, whereas they use mental shortcuts. This research aims to knowhow heuristic biases impact the individual investor’s investment decision who invested in the financial market. Also, attempt to check wheatear risk perception mediates the relationship. Cross-sectional research was done by adopting a structured and close-ended questionnaire survey method by obtaining data from 484 individual investors investing in the financial market. The study provides empirical insight into the relationship between second-order heuristic biases of the individual investor and irrational investment decision-making and checks the mediating role of risk perception. The results show the significant positive impact of heuristic bias on the irrational investment decision-making of individual investors. Risk perception partially mediates the relationship. The findings of this study encourage individual investors to understand and identify their biases or sentiments. This study will help create investors’ awareness to decide on their financial capacity after assessing all available alternatives.

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Section: Resultsmentioning

confidence: 99%

Impact of Heuristic-Driven Biases on Investment Decision-Making of Individual Investors: The Mediating Role of Risk Perception

Yadav¹,

Chaudhary²

2022

OJC

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“…Therefore, we used the PROCESS macro Model 7 to test the proposed moderated-mediation model (see e.g. Dymecka et al, 2021;Salman et al, 2021;Su et al, 2019). We bootstrapped with 5,000 samples with 95% confidence intervals in the present study.…”

Section: Discussionmentioning

confidence: 99%

Thinking, checking and learning: testing a moderated-mediation model of social media news use conditional upon elaboration on political knowledge via fact-checking

Kim

Cooks

Kim

2021

OIR

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PurposeEmploying the cognitive mediation model, the study aims to examine a moderated-mediation mechanism of social media news use contingent upon elaboration on political knowledge through fact-checking – specifically, the interaction effect of social media news with elaboration on fact-checking.Design/methodology/approachThe moderated-mediation model is tested using panel survey data collected during the 2016 USA presidential election (N = 1,624 at Wave 1; N = 637 at Wave 2).FindingsThe findings reveal that social media news users are frequent visitors of fact-checking websites. Results also suggest that those with increased social media news use and cognitive elaboration on news content are more likely to visit fact-checking sites, which contributes to increased political knowledge.Originality/valueThe results of the current study, especially in the era of social media environment where various information is overflowing, suggest an important role of individuals' responsibility as democratic citizens given that people's cognitive elaboration and surveillance efforts, which tries to think about important public issues they consume through media, could strengthen a positive pathway toward informed citizens.

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“…Age life cycle also influences risk threshold level. For example, a person at retirement age becomes more conservative and avoids high-risk ventures (Thanki, Karani, & Goyal, 2020;Salman et al, 2021). Risk tolerance, financial literacy, and investment decisions are correlated.…”

Section: Risk Tolerance and Investment Decisionmentioning

confidence: 99%

Behaviour Biases and Investor Investment Decisions in Pakistan Foreign Exchange Market

Jan,

Adil

2022

Mark forces

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Many investors in developing countries, including Pakistan, make incorrect decisions due to behavioral biases. Thus, this study examines the relationship between behavioral biases and investment decisions and the moderating role of “financial literacy on investment decisions.” Using a predeveloped questionnaire, we collected 419 responses by focusing on the respondents who trade extensively in the foreign exchange market. The data analysis includes descriptive analysis, correlation, reliability, validity, and hypotheses testing using Smart PLS. The study found herding bias, overconfidence, and representativeness significantly affect the investment decision. Risk tolerance insignificantly affects investment decisions. We also found that financial literacy has a moderating effect on investment decisions. The study recommends that policymakers arrange seminars and workshops for investors on financial literacy. Such measures may reduce the investors’ decisions based on behavioral biases.

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The impact of heuristic availability bias on investmentdecision‐making: Moderated mediation model

Cited by 14 publications

References 54 publications

Impact of Heuristic-Driven Biases on Investment Decision-Making of Individual Investors: The Mediating Role of Risk Perception

Impact of Heuristic-Driven Biases on Investment Decision-Making of Individual Investors: The Mediating Role of Risk Perception

Thinking, checking and learning: testing a moderated-mediation model of social media news use conditional upon elaboration on political knowledge via fact-checking

Behaviour Biases and Investor Investment Decisions in Pakistan Foreign Exchange Market

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