The Influence of Behavioural Factors on Investors Investment Decisions: A conceptual model

Although finance has been studied for thousands years, behavioral finance which considers the human behaviors in finance is a quite new area. Behavioral finance theories, which are based on the psychology, attempt to understand how the psychological variables(heuristric, prospect, and herding) and perceived risk behavior (Risk Perception, Risk attitude and Risk Propensity) influence individual investors’ behaviors and how these variables influence the investment performance and investment satisfaction. The relations between the heuristric, prospect, and herding and risk perception, risk attitude and risk propensity with their respective items effecting the investment behavior is analysed. The stock market in which all these decisions are made by investors have its influence on the investment behaviour of investors, therefore the stock market with its respective items is also incorporated in the study. The outcome of these decisions will give us results in the form of investment perfeorance and investment satisfaction. The main objective of the present study is to develop a conceptual research model exploring the full set of all the behavioral factors influencing individual investors’ investment decisions in the Stock market., As there are limited studies about behavioral finance with the above said variables therefore, this study is expected to contribute significantly to the development of this field and help both the practioners and the academicans in the development of the field significantly.