Evaluating The Connection of Behavioral Biases and Investment Decisions of Equity Market Investors Using SEM Approach

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Nidhi Jain, Dr. Bikrant Kesari

Abstract

The key objective of the paper is to study the magnitude of the disparity in actions between stock holders for short-term and long-term. Methods:  Investor traits and how the judgement on investments and behavioral bias are interconnected are contrasted by using a systemic model, as well as to compare relative behavioral bias variations including Framing Bias, Endowment Bias, Representative Bias, Cognitive Dissonance Bias, Self-Control Bias and Overconfidence Bias. Distinguishing evidence of behavioral characteristics that are normally related to investment venture helps to provide assessments and confine trading techniques. Results: Between July 2020 and August 2020, the cognitive effect of investor decision-making is contrasted via test review of 300 substantive responders from deliberate Indian stock market investors. Taking into account the structural equation modelling (SEM), a route study is carried out of the manner in which stock investment and proposed behavioral inclinations are concomitant. Conclusions: Observational outcomes suggest that the systemic path model deliberately correlates with the survey content, demonstrating the influence of behavioral discrimination in decision-making for individual investments. Our results also indicate that short-term and long-term investors' behavioral patterns vary substantially.

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