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Does the Bias Towards Under and Overconfidence Affect Investment Decisions?: Proof From India

Does the Bias Towards Under and Overconfidence Affect Investment Decisions?: Proof From India
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Author(s): Mayank Kumar (Christ University, India), Nirakarnath Pandey (Christ University, India)and Abhinav P. Tripathi (Christ University, India)
Copyright: 2025
Pages: 36
Source title: Unveiling Investor Biases That Shape Market Dynamics
Source Author(s)/Editor(s): Xu Xiong (City University, Malaysia)and Loang Ooi Kok (Universiti Malaya, Malaysia)
DOI: 10.4018/979-8-3693-9380-2.ch004

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Abstract

This article intends to understand the outcome of heuristic biases “overconfidence” and “underconfidence” in the short-term and long-term investment decision-making behaviour of investors in Indian market. Overconfidence and underconfidence biases have been measured through a well-structured questionnaire of various statements related to heuristic biases. SPSS 22 and the intuitive graphical user interface of PLS-SEM (SmartPLS) have been used to analyse the survey data. This article has found a positive relationship between the long-term and short-term investment decisions with overconfidence bias and a negative relationship between the short-term investment decisions and underconfidence bias. However, no relationship has been identified between long-term investment decisions and underconfidence bias. This outcome is partially in sync with the findings of various studies related to overconfidence bias conducted in other countries. Whereas due to the unavailability of literature on underconfidence bias, results cannot be compared with the studies conducted in other countries

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