Analysis the Effect of Heuristic Biases on Investment Decisions and Market Efficiency for future policy making
Subject Areas : Stock Exchange
Shahriar Shirooyehpour
1
,
Rohullah Bayat
2
,
Ali Moafi
3
1 - Department of Future Studies, Faculty of Social Sciences, Imam Khomeini International University (RA), Qazvin, Iran
2 - Department of Accounting, Faculty of Social Sciences, Imam Khomeini International University, Qazvin, Iran
3 - Department of MBA, Faculty of Management and Accounting, Allameh Tabataba'i University, Tehran, Iran
Keywords: Tehran Stock Exchange, Investment decisions, market efficiency, heuristic biases,
Abstract :
The Behavioral finance literature states that human beings in practice behave differently from what modern financial theories portray as rational human beings, so the assumption of rationality of investors and the belief in the efficiency of stock markets has been criticized. Accordingly, the present study examines the impact of investor behavioral biases on how to make decisions and market efficiency simultaneously, which has not been addressed so far. It also highlights the importance of understanding the process and the role of behavioral factors in investor decisions and market efficiency for future capital market policymakers and regulators. The present study is applied in terms of type of use and descriptive-correlational research. The target population of this study was real investors in Tehran Stock Exchange and Available purposive sampling method was used. Structural equation modeling were used to analyze the data and test the conceptual model of the research. The research findings show that biases of overconfidence, representation, availability and anchoring and adjustment have a significant effect on market efficiency. Findings also showed that overconfidence bias, anchoring and adjustment have a significant effect on investment decisions. Behavioral biases among investors are inevitable that these biases can affect investors' decisions and market efficiency.
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