Study of common investment biases in Indian Investors

Researchers have found evidences that investment decisions of investors are guided by their desires, goals, prejudices biases and emotions. Investors frequently exhibit biases like overconfidence, overreaction, framing effect, self attribution bias and regret avoidance, anchoring etc. that leads them to costly mistakes in the market place. The present study aims at studying whether the Indian Investors are also susceptible to these common behavioural biases like their western counterparts or systematically differ from them. The study employs primary data collected by communicating with the participants through a structured self administered questionnaire. A convenient sample of 428 investors belonging to the city of Indore in Central India, participated in the survey carried out during July – October 2006. The study provides evidence that Indian investors are susceptible to fall prey to common behavioural biases during investment decision making process.